General average, and why your fruit is held

General average is the rule that when a ship and its cargo are saved from a common danger, everyone with property on board shares the cost. A deliberate sacrifice or an extraordinary expense made for the common safety is repaid by every interest, in proportion to the value of what it saved. The idea is one of the oldest in shipping and predates insurance. It is normally applied through the York-Antwerp Rules named on the back of your bill of lading.

It is declared after a fire, a grounding, a serious engine failure, or anything else needing salvage or a diversion to a port of refuge. Containers jettisoned to save the ship, the salvor’s fee, the cost of the unscheduled call: all of it goes into one pot. That pot is then divided across the ship and every consignment on board.

What it means for a container of fruit #

Nothing has happened to your cargo. That is the part importers find hardest to accept, and it makes no difference at all.

Once general average is declared, the adjuster appointed by the shipowner holds all the cargo until each owner posts security. That is usually a signed general average bond from you, plus a guarantee from your cargo insurer. Only then is your container released. Working out the actual contributions takes months or years; the security is what unlocks the box in the meantime.

For a reefer of fruit that is the whole problem. The delay is measured in weeks even when it goes smoothly, and it goes smoothly only for importers whose insurer can issue a guarantee within a day or two. An uninsured importer is asked for a cash deposit against the value of the cargo, and by the time it is arranged there is nothing left worth collecting.

FAQ #

Do I have to pay general average if my cargo was not damaged? #

Yes. Contribution is based on the value of the property saved, not on whether yours was touched. That is the point of the rule — the sacrifice was made for the benefit of everyone on board, so everyone on board shares the cost.

What is a general average bond? #

An undertaking you sign agreeing to pay whatever contribution the adjuster eventually assesses. It is normally paired with a guarantee from your cargo insurer, and together they are what release your container. Neither fixes the amount, which is settled later.

Is general average covered by cargo insurance? #

Standard cargo policies cover the general average contribution and the salvage charges, and the insurer issues the guarantee that gets your container moving. This is the clearest reason to carry cargo insurance even on trades where you have never had a loss.