I wrote this article a year ago and published it on a blog which I have since pulled offline. I went through the article today and realised the information is still relevant. Here it goes!
I’m writing this to you from Mozambique where my friend and I are vacationing. What a beautiful hotel we’re in and a great area. The food here is great but to be honest with you, Iam not enjoying any of it. One of my friend’s business lines involves importing and exporting various products. Conducting business with people you have never previously met… and then travelling to the other side of the world with the objective of embarking on a new course in life does indeed require a ‘leap of faith’.
My friend asked me to accompany him to see for himself if his consignment was indeed being auctioned and see what measures he could take to recover his containers. We couldn’t help stop the CUSTOMS AUTHORITIES at BEIRA from moving all unclaimed Mozambique Local Imports’ Containers from subject Vessels, to Customs area for public auction.
“Next, they will start moving all unclaimed Transit cargo discharged from our vessel to their area.” My friend said worriedly.
“ It could have been avoided”, I responded.
Yes! It could have been avoided. How? With Insurance! Yes! All you have to do is talk to a professional Risk Consultant or your Insurance Broker, but you have to be sure they know their stuff. Iam going to do three things. Firstly, Iam going to explain my friend’s fate and why his cargo was being auctioned. Next I will expose an Insurance solution which could have fully cushioned his cargo whilst my friend danced on the Mahogany and lastly, I will explain marine risks and how to fully exploit available Insurance products.
I assure you that after reading this series of articles, you will be aware of the perils your business and yourself are facing and how you can provide for them by getting an appropriate Insurance policy. My friend had imported cargo worth $300,000.00 which was going to mark the turn around on his business. Before I continue, let me warn you. Bookmark this page, or subscribe through email or RSS.
Whilst in transit, their ship was seized by pirates for over a month. The ship owners then negotiated with the bandits who demanded to be paid a ransom. The ship owners then paid the ransom. Listen very carefully now. Ship owners believe that if their ship is seized, it’s because of the cargo. Thus, every interested party has to contribute a certain percentage of the ransom which is usually calculated by Professional Marine Adjusters.
The ship-owners will thus not release the goods unless the cargo owners pay their ransom contribution. The contribution of each interested party will then be a percentage of the CAF i.e. Cost of cargo as stated on the bill of lading plus freight. Taking my friend’s cargo which was worth $300,000 with freight costs of $35,000 gives a CAF value of $335,000. The Marine adjusters calculated the General average as 60%. Thus my friend had to pay $201,000 as his contribution to the ransom and other costs incurred as a result of the seizure of the ship by pirates.
The total cost of his cargo became $536,000 ($335,000 + 201 000) which ate a large chunk of his profits. It would represent a full and final settlement in the matter and allow the ship-owners to release his containers. We all know that a ship cannot dock forever. If you do not claim your goods and pay your general average contribution, then your goods will be auctioned to enable ship owners to recover their monies.
Whilst this may sound evil, I want you to know there are two Insurance solutions to this. One is proactive whilst the reactive fire fighting solution tends to be more expensive. I will expose both methods in the next article. Why am I telling you all this? I care about your business. Succeed through Insurance. And as aways…
To your continued success
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