Glossary
General Average Statement
A document in supply chain logistics that outlines the proportional sharing of losses incurred during ocean logistics among the cargo owners.
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General Average Statement and Fair Distribution of Losses in Sea Logistics
In supply chain logistics, a General Average Statement is a legally binding document that outlines the process of sharing the financial burden of the lost cargo and expenses incurred after a sea transport accident. The parties involved include the ship-owner, cargo owners, and insurers. A qualified Average Adjuster prepares this document through careful assessment of the value of the sacrificed cargo and determines the contribution that each party must make.
Importance of General Average Statement
The purpose of the General Average Statement is to ensure that all stakeholders bear a fair share of the losses incurred for the greater good of the entire voyage. It promotes cooperation and prevents individual cargo owners from suffering disproportionately or being exempt from contributing to the collective expenses. Cargo owners are required to provide a General Average bond or security to guarantee their portion of the contribution until the final settlement is reached.
Having a well-defined General Average Statement helps to mitigate financial risks, promote transparency, and uphold fair burden-sharing when faced with unanticipated maritime incidents.
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