What is General Average?
General average is a principle of maritime law under which, when an extraordinary sacrifice or expenditure is intentionally and reasonably made for the common safety of a sea voyage, the loss is shared proportionally by all parties with property at risk: ship, cargo and freight. Typical general average acts include jettisoning cargo, deliberately grounding a vessel, firefighting that damages cargo, and salvage or towage costs incurred to save the whole venture. The rules are almost always applied through the York-Antwerp Rules, published by the Comité Maritime International and incorporated into bills of lading and charter parties, with the 2016 edition the latest. Rule A defines the general average act, and a neutral average adjuster calculates each party's contribution based on the value of the interests saved. Contributions are owed regardless of whether a given cargo owner's goods were damaged.
Why it matters for forwarders
When a carrier declares general average, every cargo interest on the vessel must provide security before its cargo is released, normally a general average bond signed by the cargo owner plus a guarantee from its cargo insurer, or a cash deposit if uninsured. If salvage is involved, separate salvage security is often required as well, which can delay delivery for weeks. Forwarders must quickly identify which clients have cargo on the affected vessel, collect commercial invoices, and connect consignees with their insurers. House bill holders are exposed through the NVOCC, which in turn faces the ocean carrier's demands. Encourage clients to buy all-risk cargo insurance, because uninsured shippers must fund GA and salvage deposits themselves.