DALI Baltimore bridge collision: Marine Cargo insurance updates

In the early hours of the morning of 26 March, the container ship DALI collided with the Francis Scott Key Bridge as it was leaving the Port of Baltimore. ?

Several workers and vehicles were on the bridge as the collision took place. Tragically, four workers who fell into the river are presumed dead alongside two additional victims recovered from the water.

As a result of the collision, there is extensive damage to the bridge and vessel, including several containers resulting in potential cargo losses and damage.

Marine cargo movements will be subject to significant delays. This applies not only to cargo aboard the DALI, but also cargo and containers awaiting shipment and inbound vessels unable to reach the Port of Baltimore. Any temperature or time sensitive cargo in this situation may also be lost.

It is thought that this might be the largest example of port blockage seen by the insurance market in recent years, with some industry commentary saying that costs could run into the “millions of dollars per hour”.

Understandably, there is a significant amount of attention on the consequential loss adjustment. Marine insurers face billion-dollar payouts based on the Exposure on physical damage, loss of life and personal injury, cargo and delay claims.

Meanwhile, the DALI’s Singapore-based owners have filed a limitation of liability court petition seeking to cap their liability for claims arising from the collision. Though there is the potential that this petition might be challenged.

The Financial Times reported that the Chief Executive of Lloyd’s of London insurance market has said that insurers should just “get on with it” and payout rather than discuss sector liability in a protracted debate.

Operations to restore access to the port are underway while other ports across the East Coast are opening up to increase capacity and mitigate disruption.

The possibility of a General Average declaration

Given the scale of the disruption, the estimated costs and the potential difficulty in extricating the vessel and safely removing cargo, this incident may give rise to a General Average declaration.

One of the most well-known recent examples of a General Average declaration was by the owners of the Ever Given. This followed its well-publicised grounding in the Suez Canal and subsequent supply chain disruption in March 2021.

It is also possible that salvage services required by the vessel may be rendered on Lloyd’s Open Form (LOF) or similar terms.

In the event of a General Average declaration and/or LOF salvage, securities will need to be provided for all cargo on board. ?

Highlighting cargo risks

According to Lloyd’s List Intelligence, over the past decade, there have been 203 cases of containerships striking infrastructure.

The most common incidents include striking harbour walls, piers, quays and locks. Data from the marine safety organisation, RightShip says in 2022 half of maritime incidents were recorded in ports and within terminal boundaries.

This highlights that on a? daily basis, marine cargo faces significant BI risks and global news incidents illustrate the issue further.

This represents a complex area of risk management. Consequently, it is essential brokers have access to an underwriting facility and appropriate expertise specialised in dealing with risks of this nature.

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At Fiducia MGA, our Marine Cargo and Freight Liability underwriters are empowered to provide flexible, meaningful cover for today’s global supply chain. Contact us today to discuss your risk management needs.