What happens when there's a casualty of the sea? An inside look
Welcome to an in-depth exploration of casualties at sea and how they impact the global supply chain. In this article, we'll dive into the intricate world of maritime incidents, from fires to pirate attacks, and uncover the crucial role of insurance providers like TT Club in mitigating the risks faced by the industry.
Defining a casualty of the sea
A casualty of the sea is an event that puts a vessel in danger, risking loss of life, property, cargo, or the vessel itself. These incidents can significantly impact the entire maritime adventure, posing real challenges and problems for all parties involved.
Common types of ship casualties
- Fires: One of the most prevalent incidents, often caused by undeclared dangerous goods in containers.
- Groundings: Incidents like the infamous Ever Given grounding in the Suez Canal.
- Engine failures and collisions
- Structural failures: Rare but catastrophic events like the MOL Comfort splitting into two and sinking.
- Pirate attacks: Crew held hostage, and ransoms demanded for their release.
The aftermath of a casualty
When a casualty occurs, the crew must immediately alert the owners, who then inform their insurers. The first step is to contract salvage services to assist the vessel. One common contract is the Lloyd's Open Form (LOF), which automatically binds all property on board, including cargo and containers, to contribute to the salvage claim.
General average: a centuries-old concept
In some cases, the owners may declare General Average (GA), a maritime principle that aims to restore the parties to the position they would have been in had the incident not occurred. GA involves the intentional sacrifice of cargo or part of the vessel for the collective benefit of the maritime adventure. The costs are then shared proportionally among all parties with property on board.
Salvage claims and negotiations
The salvage claim amount is determined through negotiations or arbitration, considering factors such as the salved value, environmental protection efforts, the degree of danger, time taken, and the salvors' investment in equipment and resources.
TT Club's role in casualty management
As an insurer of physical container loss and liability for GA and salvage claims, TT Club takes immediate action when a casualty occurs. This includes:
- Contacting members to establish their interests in the vessel.
- Lodging security with salvors and GA adjusters to release containers.
- Potentially recovering losses by claiming the vessel was unseaworthy at the voyage's commencement.
Casualties of the sea present complex challenges for the global supply chain, requiring the expertise of specialised insurers like TT Club. By understanding the intricate processes involved, from salvage operations to GA declarations, industry stakeholders can better navigate these high-risk maritime adventures and mitigate potential losses.
