General Average means a general loss. The law of general average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency. For instance, should the crew jettison some cargo overboard to lighten the ship in a storm, the loss would be shared in proportion by both the carrier and the cargo-owners.
Other examples include stranding, fires, and collisions. All stakeholders contribute to offset the losses incurred. General Average claims can be in the millions of dollars.
What does this mean?
All cargo is seized. All cargo owners are held responsible to share in the loss. You may be required to post a bond and/or cash deposit to get release of your cargo following a general average – even though there was no loss or damage to your goods. By purchasing cargo insurance, your insurance company assumes the responsibility and expedite the release of your cargo.
If an ocean carrier declares general average and your cargo was on the ship, your cargo will not be released until the salvage security and general average deposit are calculated. This can take weeks and be quite costly. For example, you have to pay until $50,000 simply to release your cargo from the container. The freight was only valued at $80,000.