BY TOBY GOOLEY, SENIOR EDITOR
IMPORT/EXPORT
transportationreport
SUPPOSE YOU’RE IMPORTING CONTAINERS OF
machine parts from, say, Japan. Every week, the containers are loaded on a ship operated by the same carrier
you’ve used for years. The ship casts off and your cargo
heads out on what looks to be another routine voyage
across the Pacific. What could go wrong?
An earthquake and tsunami, followed by a nuclear
disaster, for one thing. Or the steering could fail and
cause the ship to run aground, the engine could catch fire,
or a collision could leave the ship with a hole punched
through its hull—to name just a few of the more common
possibilities.
When disaster strikes, many people assume the ocean
carrier will absorb the cost of recovery and repairs. But
that’s generally not the case. Under a doctrine of maritime law known as “general average,” cargo owners are
required to pay a share of those costs.
General average allows carriers to charge beneficial
cargo owners for costs that meet criteria established by
international maritime law. Examples include the costs of
towing the ship to safety, repairs, unloading and reloading cargo, rescuing the crew, and compensating customers for jettisoned cargo.
This legal principle, enshrined in international maritime treaties, contracts, and insurance policies, dates
When a ship sinks or suffers damage on
the high seas, cargo owners must share
the cost of setting things right—even if
they weren’t at fault.
Ship in
distress?
Get out
your wallet
