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Comment by blamazon | Hacker News Reader

If I am understanding this correctly -- if I ship cargo across oceans via container, I am potentially accepting some piece of liability for fixing any accident that occurs? Is this true?

Or are they just saying, oopsie, your costs are your own costs due to this lost cargo, we will not recompensate.

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You bear the risk that you’ll have to pay your pro-rata share of any cargo sacrificed to save the ship.

You can (and probably should) have your own insurance that will pay you in case this happens. The insurer can pay cash to the cargo owners ASAP, and then sort out the equitable sale of the actual cargo and distribution of the proceeds. Kind of like a bankruptcy for a ship’s voyage.

If they have to wreck some stuff to save everybody else, and that works, everybody else has to pay something. Fair-ish, but I suspect Insurers start to call foul on Evergreen’s repeated groundings.

It is surprising how even "professionals" (read: companies shipping loads of containers every month) don't get that insurance part. And that insurance is dirt cheap, I used to have one as a basis for my now closed company. It covered all losses, globally, for all modes of transportation for solar modules (and some other electronics falling into the same class of products), covered warehousing. For a projected transported value of appr. 100k € per months I paid roughly 1k per year. And still people for go that, relying on the suppliers "insurance" based on Incoterms... Well, those insurance is usually very limited and leaves some holes, especially if people don't get what incoterms to use and what they mean...

If you're shipping "loads of containers every month" but you don't send them all on the same ship, perhaps you can afford to self-insure. Insurance is so cheap because only a tiny fraction of freight is lost.

It took one un-loading incident in Rotterdam to cause damage north of what 10 years worth of insurance premiums would have cost, in the case I mentioned above. And that's excluding the added benefits of your insurance handling all the administrative stuff, from on-site haverie commissars (transportation acident investigators) to sorting out claims against any third parties. Or claims from any third parties.

In any shipping, part of the risk is that your cargo may arrive late, damaged or never - you may get insurance for that, but that risk exists.

GA means that if due to some issue they throw away half of the cargo to save the other half (which is a good thing - you want them to be permitted to do that without going bankrupt, because otherwise there is no motivation to save the half that can be saved) then instead of some people getting their cargo and some losing it, those whose cargo was saved pay a proportional value to those whose cargo got thrown away, so after the settlement all of them get the same average lost cargo value.

> which is a good thing - you want them to be permitted to do that without going bankrupt, because otherwise there is no motivation to save the half that can be saved

You also don’t want them to have any incentive to treat one customer’s cargo more carefully than another’s. You want them to jettison cargo indiscriminately with the only incentive being to save the ship.

There is some incentive to discriminate - it is advantageous to everyone to jettison the cheapest cargo in order to save the more valuable cargo, no matter to whom which cargo belongs.

For some ratio of cost to weight, with consideration as to where on the ship it is... if you have time to calculate such things. In this case they probably do, if they really care to.

At the scale of these ships, though, if you have to jettison cargo you're probably looking at hundreds of containers or more. At that point it probably doesn't make that much difference which containers you jettison, it'll mostly average out.

If you have a container of iPhones, you might want to save those.

There's an interesting wrinkle: the system works on self-declared value of cargo, and is set up in such a way that people have an incentive to declare the true value of the cargo.

Basically, if you declare a value that's too low, you don't get enough money when your cargo gets thrown overboard. If you declare too high, you pay more, if somebody else's cargo gets thrown overboard.

That's true for insurance in general.

To a certain extent, yes.

The beauty of General Average is that (in insurance terms) the thing you are insuring is also the premium you pay.

If I understand it correctly, this is mostly about cargo losses resulting from voluntary actions, i. e. throwing containers overboard to lighten the ship to get it unstuck.

The idea is that the crew should not be put into a position where they argue which cargo to jettison, and the customers should not have to care about the position of their cargo on board. Averaging out partial losses makes everyone's interests align. If all cargo is lost, the result of following the process would be identical to everyone losing the value of their cargo.

Costs from environmental damage are excluded. Some of the salvage operations are included. Not sure if it's limited to the value of your cargo somewhere, but it doesn't seem to be a risk of unlimited liability.

You can always buy insurance…..

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