Glossary
General Average Contribution
The proportional financial contribution by all shipping partners connected in a maritime incident to compensate for losses incurred or unforeseen expenses.
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Al Sharqi Shipping is a leader in the logistics industry with more than 30 years of experience in guiding and moving freight across the globe.
General Average Contribution for Financially Resilient Logistics
General Average Contribution ensures the equitable distribution of losses incurred during unforeseen incidents in shipping. For instance, vessel grounding, fire, or cargo abandonment could occur. But, in these scenarios, the General Average concept is in place to protect the interests of all parties involved. Under General Average, cargo owners, ship-owners, and other invested supply chain participants share a part of the financial burden due to losses.
What’s the process of general average contribution?
The process begins with a declaration of General Average by the ship’s master or a competent authority. Then, all parties must contribute to compensate for the sacrificed cargo, to salvage operations, make repairs, and attend to other related expenses. The contributions differ by the value of the remaining, undamaged cargo, calculated as a percentage of the total cargo’s value.
Overall, this concept encourages cargo owners, shippers, and ship owners to collaborate in optimizing supply chain logistics, with the notion that shared losses lead to shared responsibilities.
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