General Average and Forwarder Practice

General Average is a maritime principle under which extraordinary sacrifices or expenses voluntarily and reasonably made to protect the vessel, cargo and voyage from a common danger are shared among the parties involved in the voyage.

For forwarders, General Average is not only an insurance term. It creates practical work such as explaining the situation to cargo owners, collecting documents, contacting cargo insurers, arranging General Average security, checking guarantee documents and coordinating cargo release.

The forwarder does not calculate the final General Average adjustment. That work is normally handled by the appointed average adjuster. An average adjuster is a specialist who collects the relevant costs and documents, calculates the General Average adjustment and allocates the contribution among the vessel, cargo and other interests.

Overview

General Average may be declared when extraordinary action is taken to save the vessel and all cargo interests from a common maritime danger.

Typical situations include cargo jettison, firefighting, entry into a port of refuge, salvage assistance, emergency repairs or other extraordinary measures taken for the common safety of the voyage.

Even if a particular cargo is not physically damaged, the cargo interest may still be required to provide security or contribute to General Average if the shipment benefited from the common safety action.

For this reason, cargo owners are often surprised when they are asked to submit documents or provide security even though their own cargo appears to be sound.

Why It Matters for Forwarders

When General Average is declared, cargo release may be delayed until the required General Average security is provided.

Forwarders may need to explain the process to cargo owners, collect commercial and insurance documents, contact the cargo insurer, confirm whether cargo insurance is in place, and coordinate with the carrier or average adjuster.

The most urgent practical issue is usually not the final contribution amount. It is the timely arrangement of documents and security so that the cargo can be released without unnecessary delay.

Role of the Average Adjuster

The average adjuster is the specialist who manages the technical adjustment process in a General Average case.

The average adjuster may request shipment documents, cargo values, insurance information, guarantees, bonds and other evidence from the parties concerned.

The average adjuster later prepares the General Average adjustment, calculates allowable expenses or sacrifices, and determines how the contribution should be allocated among the relevant interests.

Forwarders do not replace the average adjuster. Their practical role is to help the cargo owner understand the process, collect documents quickly, communicate with insurers and avoid delays in cargo release.

Practical Flow

A typical General Average handling flow may be as follows:

1. The carrier, vessel operator or average adjuster issues a General Average declaration or notice.
2. The forwarder receives the notice and informs the cargo owner or consignee.
3. The forwarder explains the required documents and security process.
4. The cargo owner confirms whether cargo insurance is in place.
5. If insured, the cargo insurer or insurance broker arranges the required General Average guarantee.
6. If uninsured, the cargo owner may be required to provide a cash deposit or other security.
7. The carrier or average adjuster confirms that security has been received.
8. Cargo release is arranged after the required security conditions are satisfied.
9. The final General Average adjustment proceeds later under the average adjuster’s process.

Forwarders should manage this process quickly because delay in security arrangement may create storage charges, demurrage, detention or delivery delays.

Main Documents

The following documents may be requested in a General Average case:

• B/L or sea waybill
• Commercial invoice
• Packing list
• Cargo insurance policy or certificate
• General Average Guarantee
• General Average Bond
• Cargo value documents
• Notice from the carrier or average adjuster
• Import customs documents
• Delivery-related documents
• Power of attorney or authorization documents, where required

The required documents may differ depending on the carrier, average adjuster, insurer, country, cargo value and shipment structure.

General Average Guarantee and Bond

In many insured cargo cases, the cargo insurer provides a General Average Guarantee to secure the cargo owner’s possible contribution.

The cargo owner may also be required to sign a General Average Bond or similar undertaking. These documents allow the cargo to be released while the final adjustment is pending.

If the cargo is uninsured, the cargo owner may need to provide a cash deposit or other form of security. This can create significant cash-flow and delay problems.

Forwarders should not promise cargo release until the carrier or average adjuster confirms that the required security has been accepted.

Relationship with Cargo Marine Insurance

Cargo marine insurance is highly important in General Average cases.

If the cargo is insured under appropriate cargo insurance, the insurer may usually handle the General Average guarantee, related documentation and later contribution issues within the scope of the policy.

If the cargo is uninsured, the cargo owner may need to handle the security and contribution directly. This may involve a cash deposit, direct correspondence with the average adjuster and later payment of the assessed contribution.

Forwarders should therefore confirm at an early stage whether the cargo owner has cargo insurance and who the insurer or insurance broker is.

Forwarder Check Points

When General Average is declared, forwarders should check the following points:

• Which vessel, voyage and shipment are affected
• Whether the notice is from the carrier, vessel operator or average adjuster
• Which B/L or shipment numbers are involved
• Whether the cargo owner has cargo marine insurance
• Which insurer or broker should be contacted
• Which documents are required for General Average security
• Whether a General Average Guarantee, Bond or cash deposit is required
• Whether cargo release is blocked until security is accepted
• Whether storage charges, demurrage or detention may arise
• Who will communicate with the consignee, insurer, carrier and average adjuster

The forwarder’s practical value is in organizing information quickly and preventing communication gaps.

Common Examples

Example	Practical meaning
Cargo jettison	Some cargo is sacrificed to save the vessel and remaining cargo.
Firefighting	Extraordinary firefighting costs are incurred to protect the vessel and cargo.
Port of refuge	The vessel enters an unscheduled port for safety reasons.
Salvage assistance	Salvage services are used to save the vessel and cargo.
Emergency repairs	Special repairs are made to allow the voyage to continue or the vessel to reach safety.

Common Problems

• The cargo owner does not understand why security is required when the cargo is not damaged.
• The cargo owner has no cargo insurance.
• The insurer or broker is not contacted quickly.
• Commercial invoice or cargo value documents are missing.
• The General Average Guarantee or Bond is incomplete.
• The forwarder assumes cargo can be released before security is accepted.
• Storage charges, demurrage or detention arise while documents are being arranged.
• The consignee, shipper, insurer and carrier receive different explanations.

These problems may lead to cargo release delay, additional cost, customer complaints and responsibility issues between the parties.

Practical Notes for Japan-Related Shipments

For Japan-related shipments, origin-side and destination-side forwarders should understand that General Average often becomes a document and communication issue before it becomes a final money issue.

The consignee in Japan may need to arrange documents quickly, confirm cargo insurance, contact the insurer, submit a General Average Guarantee or Bond and coordinate cargo release with the carrier or average adjuster.

If the cargo is uninsured, the consignee may need to prepare a cash deposit or other security before cargo release. This can delay delivery and increase costs.

Forwarders should explain the process clearly and avoid giving the cargo owner an unrealistic expectation that cargo release will be automatic.

Forwarder Responsibility and Communication

Forwarders do not decide the General Average adjustment and do not normally determine the final contribution amount.

However, forwarders may face complaints if they fail to pass on notices, delay document guidance, misunderstand security requirements or incorrectly explain the release process.

It is therefore important to keep written records of notices received, documents requested, instructions given to the cargo owner, and communication with insurers, carriers and average adjusters.

Preparation Before an Incident

General Average handling becomes smoother when the cargo owner has prepared in advance.

Useful preparation includes:

• Arranging cargo marine insurance before shipment
• Keeping insurance certificates and invoice documents accessible
• Knowing who to contact at the insurer or insurance broker
• Keeping cargo value documents organized
• Understanding that cargo release may require security after a General Average declaration
• Clarifying the forwarder’s communication route with the consignee and insurer

Forwarders can reduce confusion by explaining the importance of cargo insurance and General Average security before an incident occurs.

Key Takeaway

General Average is a maritime principle under which extraordinary sacrifices or expenses made for the common safety of the vessel and cargo are shared among the interests involved in the voyage.

For forwarders, the main work is not the final calculation of the contribution. The practical work is explaining the situation, collecting documents, contacting insurers, checking General Average security and coordinating cargo release.

Cargo marine insurance greatly affects the burden and speed of response. Forwarders should help cargo owners understand the process early, arrange documents quickly and avoid unnecessary delay in cargo release.