General average declared over Dali’s Key bridge collision

Singapore-based Grace Ocean, the owner of the M/S Dali containership involved in the collision with the Francis Scott Key Bridge in Baltimore on March 26, resulting in its collapse, has officially declared general average.

The move has been confirmed by Mediterranean Shipping Company (MSC), a Switzerland-based container shipping major, in a customer advisory dated April 12. The confirmation comes following widespread market rumours circulating over the past few weeks.

The declaration of general average in the maritime insurance sphere marks a critical juncture wherein all stakeholders involved in a sea voyage—shipowners, cargo owners, and sometimes shippers—jointly bear the financial burden incurred to safeguard the collective interests of the vessel, cargo, and crew.

It is deemed one of insurance’s most intricate procedures as it involves insurers calculating the value of all goods aboard the vessel to ascertain each shipper’s liabilities, a task complicated by the unknown contents of each container and historically taking up to five years. Hence, shippers with cargo on the Dali that don’t have proper insurance coverage might end up footing a hefty portion of the expected large salvage bill.

“No indication is communicated so far as when and where their vessel will be berthed and discharged, but this decision indicates that the Owners expect the salvage operations to result in high extraordinary costs for which they expect contribution from all salvaged parties under General Average,” MSC said.

“Richards Hogg Lindley (RHL), London has been appointed as their General Adjuster and they notified us of their intention to keep all containers, including MSC’s containers, under their control until security arrangements have been made with the Average Adjusters, both for General Average and Salvage.”

The M/S Dali, chartered by MSC’s 2M Alliance partner Maersk, carries cargo belonging to both Maersk and MSC customers. Operating on a 2M alliance service between Baltimore and the Far East, the 9,962 TEU containership was en route from Baltimore to Colombo when the collision occurred.

Britannia P&I Club is the insurer of the containership. It is not clear what the exact amount of insured losses will be, however, market estimates indicate it could range between US$ 2-4 billion, making it the costliest marine incident for insurers.

Investigation into the cause of the accident is underway, however, based on initial findings it is believed that the electrical power system on board the ship might have contributed to the blackout and loss of control over the vessel.

Salvage operations are still ongoing and the Unified Command continues to remove containers onboard M/V Dali and clear bridge wreckage at the Key Bridge incident site.

As of April 11, approximately 38 containers have been removed, a key step in safely relocating the M/V Dali and fully reopening the Fort McHenry Channel. This process allows safe access to remove parts of the Key Bridge obstructing the ship’s bow, reducing its weight and enabling its movement, as stated in the command’s update.

The U.S. Army Corps of Engineers (USACE) aims to fully reopen the permanent channel by the end of May, restoring port access to normal capacity. Based on the salvage operations plan released by USACE, the three main priorities are clearing the federal channel, which will include removing the bridge span from Dali and removing wreckage from both the vessel and the channel, followed by refloating and removing the containership from the grounding spot. Finally, the plan is to disassemble and remove the bridge together with clearing of all of the remaining wreckage from the channel.