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Your container is intact. You'll still pay - Dark Stories #6

It's March 6, 2018. The Maersk Honam is sailing through the Arabian Sea, 900 nautical miles off the coast of India. On board are 7,860 containers and 27 crew members. Suddenly, a fire breaks out in cargo hold number 3. The crew fights for two hours. To no avail. The CO2 system fails to extinguish the fire. Smoke infiltrates the living quarters. At 5:15 PM, the captain orders an evacuation. Five sailors perish. A few weeks later, cargo owners began receiving letters from the shipowners. Not about compensation. But about bills.

30.06.2026
Insphera S.A.

It's March 6, 2018. The Maersk Honam is sailing through the Arabian Sea, 900 nautical miles off the coast of India. On board are 7,860 containers and 27 crew members. Suddenly, a fire breaks out in cargo hold number 3.

The crew fights for two hours. To no avail. The CO2 system fails to extinguish the fire. Smoke infiltrates the living quarters. At 5:15 PM, the captain orders an evacuation. Five sailors perish.

A few weeks later, cargo owners began receiving letters from the shipowners.

Not about compensation. But about bills.


A law older than most nations

To understand what happened to the cargo owners on the Maersk Honam, one must go back to the beginning — not to 2018, but to antiquity.

The principle of General Average (Awaria Wspólna) originates from the maritime law of ancient Greece and Byzantium. Its logic is simple: all who participate in a common sea voyage share the risks of that voyage. If the captain had to jettison part of the cargo overboard to save the ship, the owner of the jettisoned goods does not bear the loss alone — everyone covers it, proportionally to the value of their cargo.

In 1890, this principle was codified in the York-Antwerp Rules, which to this day are incorporated into virtually every maritime bill of lading. This means that anyone who has ever shipped goods by sea is automatically a party to this agreement — most often without knowing it.

The principle of General Average today states: if a shipowner incurred extraordinary expenses to save the ship and its cargo, all cargo owners on board must proportionally cover these costs.

Everyone. Regardless of whether their goods were damaged or not.


A bill for someone else's fire

Let's return to the Maersk Honam.

The fire was extinguished after more than five weeks. The ship was towed to Jebel Ali port in the Emirates. The cost of the salvage operation amounted to tens of millions of USD. The shipowner initiated General Average proceedings and appointed an independent average adjuster, Richards Hogg Lindley.

The adjuster calculated GA and announced the terms:

  • Salvage security: 42.5% CIF value of the cargo
  • GA Deposit: 11.5% CIF value of the cargo
  • Total: 54% value of the goods


Before the owner of a $100,000 container could retrieve their cargo — intact, safely sitting in port — they had to pay $54,000. In cash or as an insurance guarantee. Without this, the shipowner had the right not to release the container. And they exercised that right.

Industry estimates suggested that about 30% of the containers on board the Maersk Honam were uninsured. Their owners faced a simple choice: pay tens of thousands of USD out of their own pocket or abandon the goods in Dubai. Many chose abandonment.


An unforgiving mechanism

It's worth understanding exactly how this mechanism works.

Firstly: the shipowner doesn't ask about fault. General Average is not compensation for negligence. It's a joint settlement of the costs of saving a common venture. It doesn't matter that a negligent shipper of chemicals caused the fire. It doesn't matter that your container of electronics was at the other end of the ship and had nothing to do with cargo hold number 3. You participated in this venture. Your goods reached their destination thanks to this salvage operation. You pay.

Secondly: the shipowner has a lien on your cargo. Maritime law grants the shipowner a "lien" — the right to detain cargo until the General Average contribution is paid. Your goods, your contract, your documents — none of that matters. Until you make the payment or provide a bank or insurance guarantee, the container will not leave the port.

Thirdly: the amounts can be astronomical. The GA from Maersk Honam, 54% — that's not a record. It's a historically high, but not unheard-of, level. Previous cases ranged between 10% and 20%. But with the increasing size of ships and the costs of salvage operations, these numbers are rising.

Fourthly: the carrier's policy doesn't protect you. The standard liability of the shipowner (known as Hague-Visby Rules or COGSA) is limited — and does not cover General Average. You might have a bill of lading, you might have proof of dispatch, you might have evidence that your goods were in good condition. And you still pay.


Three incidents. Three bills. One pattern.

The Maersk Honam incident was widely publicized, but it was not an isolated event. Within six years, the General Average mechanism was activated three times in cases that made global headlines.

Maersk Honam, 2018. Fire in the Arabian Sea. Five dead. GA: 54% of cargo value. An estimated 30% of cargo on board uninsured.

Ever Given, 2021. The container ship ran aground in the Suez Canal for six days. Egypt seized the vessel and demanded 916 million USD in compensation. The shipowner declared General Average. Cargo owners for 20,000 containers waited months for their goods to be released — and the GA case was described as potentially the most complex settlement in maritime law history.

MV Dali, 2024. On March 26, 2024, in the early morning, the container ship Dali lost power while departing the Port of Baltimore and struck a pillar of the Francis Scott Key Bridge. The bridge collapsed. Six people died. The ship — with over 4,700 containers on board — remained trapped under the bridge's debris for weeks. Shipowner Grace Ocean declared General Average. Owners of uninsured cargo had to pay cash deposits to retrieve their containers. The total cost of the disaster was estimated at over a billion USD.

Three different disasters. Three different causes. One mechanism that, each time, triggered the same scenario: the owner of undamaged cargo receives a bill for an incident they weren't involved in.


A misconception that costs a fortune

Most Polish exporters and importers hold one belief: if something happens to the ship, it's the shipowner's problem.

This is a mistake which, in the case of General Average, can cost dozens of percent of the entire shipment's value.

The shipowner's liability for loss or damage to cargo is severely limited — and does not cover General Average. GA is a reverse mechanism: it's not the shipowner who pays the cargo owner. It's the cargo owners who pay the shipowner for conducting the salvage operation.

Sounds absurd? That's how most people react when they hear about it for the first time. But this principle is over two thousand years old, is enshrined in every maritime bill of lading, and is enforced by courts worldwide.

There's no way around it — there is only one effective means of protection.


Cargo insurance: not a luxury, but a protective mechanism

The owner of cargo insured under GA loses nothing — or almost nothing.

If you have a cargo policy covering General Average (which is standard in a good all-risks policy), your insurer issues a guarantee to the GA adjuster within days. Your container continues its journey. You don't pay cash. The settlement takes months or years, but you are not involved — the insurer handles it.

The owner of uninsured cargo must pay cash or arrange a bank guarantee — and do so immediately, otherwise the container will not leave the port.

It is estimated that 30% to 50% of goods transported by ocean are uninsured. In Poland, this percentage is likely higher, due to the widespread belief that "the shipowner is responsible" or that a CIF policy from the supplier is sufficient.

Both of these assertions are false.

A CIF policy purchased by a seller in China not only covers the narrowest possible scope of risks (Institute Cargo Clauses C), but most importantly, it does not cover General Average in a way that would allow you to quickly release your goods. You are a foreign beneficiary of a policy issued by a foreign insurer, in a foreign language, under a foreign legal system. In a crisis, when your container is stuck in Jebel Ali port and the adjuster is waiting for a guarantee, that insurer won't pick up the phone.




What you should check now

If your company exports or imports by sea, there are three questions worth asking today:

First: do I have my own cargo policy? Not a supplier's policy, not a CIF policy — your own, purchased by you, from a Polish broker, with full all-risks coverage including General Average.

Second: does my policy cover General Average? Even a good cargo policy might have this exclusion. Check the terms. Ask your broker directly.

Third: will my policy allow me to release my goods within a few days? When a shipowner declares GA, time is of the essence. It's not just about being insured, but about your insurer being able to issue a guarantee quickly and in the proper form.

The cost of a good all-risks cargo policy for containerized imports is a fraction of a percent of the goods' value. The premium for one container from Asia usually does not exceed a few tens of USD. A General Average deposit — even in a modest 20% scenario — amounts to several thousand euros for an average container. At 54%, as in the case of Maersk Honam, it's tens of thousands.


Summary

In this text, we do not judge the shipowner, the adjuster, or the victims of disasters. We describe a legal mechanism that is as old as shipping itself, is enforced regardless of circumstances, and affects every cargo owner whose goods were on a vessel at the wrong place and time.

A cargo owner who has done everything according to regulations, who has clean documents and an undamaged container, can receive a bill for over half the value of their cargo — and will be powerless if uninsured.

General Average is embedded in every ocean bill of lading you have ever signed or accepted. It's been there from the very beginning, hidden in the fine print, waiting for the right moment.

Dark Stories is a series based on real events, judgments, and reports. Described disasters: fire on MV Maersk Honam, March 6, 2018 (TSIB Singapore report, Investigation Report MIB-MAI-CAS-035); grounding of MV Ever Given, March 23, 2021; collision of MV Dali with the Francis Scott Key Bridge, March 26, 2024. Data on GA amounts from: Richards Hogg Lindley (Maersk Honam), Wikipedia/Wikimedia (Ever Given), Grace Ocean/CBS Baltimore (Dali). Estimates for the percentage of uninsured cargo on Maersk Honam from: NAU Pte Ltd / Marine Insurance Commentary. General Average Rules: York-Antwerp Rules, 2016 version.

OUR PREVIOUS PUBLICATIONS IN THE "DARK STORIES" SERIES

  1. Why do we need FOB? - dark stories #1
  2. Really CIF? - dark stories #2
  3. EXW my shield? - dark stories #3
  4. A ticking time bomb in cargo hold number 4 - dark stories #4
  5. Copper: To have or not to have? - dark stories #5

 
Sources:


Official reports and technical documents

Industry accounts — Maersk Honam and General Average

Ever Given and General Average

MV Dali and General Average

York-Antwerp Rules and the legal mechanism of GA

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