Maersk Honam’s Fire Highlights Importance Of Cargo Insurance – iContainers

Ill-Fated Maersk Hanom


The major fire that broke out on the Maersk Honam in the Arabian Sea earlier this month serves as a reminder of the importance of cargo insurance, says 100% online freight forwarder iContainers. The blaze, which started on March 9, claimed the lives of at least four crew members and caused damage to hundreds of containers.
“Given that Maersk has now declared general average, which means that the surviving cargo has to pay a share of the cost for the vessel damage, the tow, clean up, legal settlements, etc,” says Klaus Lysdal, Vice President of Sales and Operations at iContainers.
According to iContainers, the Honam fire underscores the importance of always investing in cargo insurance. By law, all shipping carriers are obliged to offer a minimum amount of insurance, but it offers limited coverage. iContainers says its general advice to its clients is always to purchase additional coverage to protect themselves from worst-case scenarios.
“As a shipper, you can and should always buy extra cargo insurance to further protect your merchandise and cushion your damage. Given the uncertainties of mother nature, it’s a worthy investment as it would cover your cargo while it’s in storage and in transit until it reaches the safe hands of your buyer.”
It’s been more than two weeks since the fire started, and the Danish shipping line has yet to confirm to which port the Honam will eventually be headed. It will still be awhile before the 2017-built vessel can be allowed to berth. Port authorities will want to make sure that all fire on board have been extinguished and determine the condition of the Honam, which is a process that could still drag on. In such a situation, having cargo insurance not only facilitates the post-shipping processes financially, but also logistically.“For clients who have insurance, filing the claim with their insurance will help speed up the process of releasing their cargo,” explains MrLysdal.
“Plus, claims are generally processed quicker through insurance companies. Without insurance, you may be stuck with the carrier’s liability which is listed on the back of the Bill of Lading: $500 per unit.”
The Danish shipping giants have since declared general average, which means that all losses will now be split among surviving cargo. Unless shippers have purchased a general average coverage insurance, they are all liable to pay a proportional portion of the damage.
“Without cargo insurance, your cargo is likely to be held hostage for payment of those charges. Simply said, without insurance, you stand to gain nothing or next to nothing at most.”, says MrLysdal.
Press Release: iContainers






Fire-Ravaged Maersk Honam to Be Towed to Jebel Ali




                                                               Image Courtesy: Indian Coast Guard


Maersk Line’s ultra large containership Maersk Honam, which was hit by a major fireon March 6, will be towed to Jebel Ali, the UAE, where its cargo will be off-loaded.
The estimated time of arrival (ETA) is still to be confirmed, and may be approximately two weeks from now, Mediterranean Shipping Company (MSC) said citing its 2M alliance partner. The salvage operation is led by Smit Salvage and Ardent.
“Based on a limited amount of information to hand, MSC reasonably expects that a substantial proportion of the cargo located after, behind the ship’s accommodation area should be in sound condition. Unfortunately, we must assume, based on the details to date, that most containers located in front of the accommodation area are damaged by fire, heat or the water used to fight the fire,”MSC said in a customer advisory.
“We will only be able to clarify the situation once the cargo has been discharged at the port of refuge and inspected.”
Maersk Line said earlier that the berthing and discharging operations of the fire-ravaged boxship would result in high extraordinary costs.
The company has therefore decided to declare General Average, under which all parties with a financial interest in the voyage are to proportionally share the losses resulting from the incident.
The Danish carrier appointed Richards Hogg Lindley (RHL), London as the General Adjuster and they will keep all containers under their control until security arrangements have been made with the Average Adjusters, both for General Average and Salvage.
The fire has claimed the lives of five of 27 seafarers that were manning the ship prior to the incident.
A full investigation into the case is expected to determine the cause of the fire and the impact to the vessel and cargo.

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Lawyers and insurers appear to be behind moves to take the still-burning Maersk Honam tto DP World's Jebel Ali container terminal, rather than to Maersk's own closer terminal at Salalah, industry sources say. One source said that while operationally it would make more sense to berth the vessel at Salalah, the fact that Maersk had declared general average on the losses from the casualty meant that control was now effectively out of Maersk's hands. The case shows that unless shippers have purchased ‘general average’ coverage, they are liable to pay a proportion of the vessel’s damage, clean up and legal settlements, iContainers notes. Meanwhile, Maersk's goal to become a global integrator in the container shipping industry and gain more direct customers will be “very difficult” to achieve, according to Drewry’s managing director Tim Power.

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