Incident on APL VANCOUVER Voyage 0IS1JW1PL

Internal Q&As for GA (General Average)

Please note: Following are information for your guideline in handling query from
customer regards to the GA. Do Not Distribute or forward to customers or media.

1. What happened on APL VANCOUVER?

On 31st Jan 2019 at 0430 hours, a fire broke out in one of the cargo holds whilst the
vessel was on passage from Shekou to Singapore. The fire has been brought to an end
with swift emergency response by its crew and immediate salvage operations that were
activated. On 12th Feb, the vessel resumed sailing from Phan Ran Bay, where it was
anchored, to Singapore (ETA 17th Feb). All crew onboard has remained safe and no
pollution has resulted from the situation.

2. Where is the cargo now?

The vessel safely berth in Keppel terminal K12 on 17 Feb 2019. Cargo discharge
operations are taking place albeit cautiously as this is not standard operations.

3. What is the status of my cargo?

Based on initial assessment, our appointed adjuster, ALBATROSS ADJUSTERS LIMITED,
had identified containers that are presumed damaged and sound. During the process of
discharge, Surveyor for Albatross will assess and ascertain the accuracy of this earlier
estimation provide updates to Albatross which will upload the updated status on their
website. You should ask your customers to check by visiting www.alba.com.cy:

Select: Customer Area

In the CARGO SECTION, select (drop down) Vessel Name: APL VANCOUVER
Case Number: 19.410-2
Pin Code: 20190131

As part of the General Average process, the shipment can only be released to the
consignees once all Salvage and General Average securities, as requested, as well as
supporting documents have been provided to the full satisfaction of salvors and
shipowners, respectively.

4. Has General Average been declared?

Yes. APL has sent a customer notice dated 5th Feb 2019 on the General Average
declaration. The owners have appointed the following as the adjusters:

ALBATROSS ADJUSTERS LIMITED

Limassol, Cyprus
Tel. +357-2558 8988
Fax. +357-2558 3254
Case handler: Mr. Kyriacos Christodoulou
Email: cargo@alba.com.cy
Website: www.alba.com.cy

5. What is the process for posting the required GA securities?

Before shipowners lift their lien and release a shipment to consignee, the owners of the

1
Incident on APL VANCOUVER Voyage 0IS1JW1PL

vessel request the following security:

a) An Average Bond signed and returned by the consignees or shippers

b) An Average Guarantee signed by cargo insurers , OR a Cash Deposit if cargo is not
insured;
c) Commercial Invoice (copy)
d) Bill of Lading or Sea Waybill (copy)
e) Ocean / Sea Freight invoice (copy)
f) Packing List (copy)
g) Insurance Premium Invoice (copy; only if cargo is insured)

Furthermore, salvors have requested the General Average Adjusters to assist in the
collection of salvage securities as well. See 7 below.

6. I’m not sure about whether my cargo was insured. What can I do?
Contact the shipper, freight forwarder or cargo broker responsible for booking your
cargo.

7. My cargo was not insured, what do I do?

Uninsured cargo will be required to provide the following security:
a. An Average Bond signed and returned by the consignees or shippers
b. A Cash Deposit;
c. Commercial Invoice (copy)
d. Bill of Lading or Sea Waybill (copy)
e. Ocean / Sea Freight invoice (copy)
f. Packing List (copy)

The amount of the cash deposit for general average is not yet known. You should contact
the Adjusters directly to seek instructions how to lodge the cash deposit.

8. What should I do now that General Average has been declared?

We urge you to provide the Adjuster information to your cargo insurer immediately. We
also recommend that you compile commercial invoices pertaining to your cargo, as you
will be required to provide these to the average adjusters.

9. Will a survey be carried out on my container/s?

Containers that have been presumed in damaged condition are slated for inspection by
the General Average surveyor after the discharge in Singapore. However, the surveyor
will only consider opening a container after security is duly provided, and will give a 48-
hour notice before a survey takes place. In order to ensure timely conduct of your survey
and to avoid incurring unnecessary delays, storage costs, etc., you are advised to
coordinate inspections with the General Average surveyor (whether directly or through
your insurer):

Taylor Marine

2
Incident on APL VANCOUVER Voyage 0IS1JW1PL

JM Fuisting
aplvancouver@taylormarine.net

When liaising with the General Average surveyor, please ensure that your bills of lading
and container numbers are made known to them.

10. What are the requirements with salvage security?

In addition to the above general average security, salvors demand salvage security to be
lodge before the cargo can be delivered at destination. Please see the instructions issued
by the Adjuster or contact them directly.

The Owners of the APL Vancouver have entered into a pre-settlement agreement with
Salvors Ardent with respect to the remuneration that Salvors will be entitled to under a
Lloyds Open Form. This provides Ardent with remuneration based on costs of assets
deployed for operations plus a 25% uplift which we estimate to be lower than what
Salvors would get in a Salvage award under the traditional Lloyds Open Form of “No
Cure, No Pay”. We are of the view settlement with Salvors under this pre-settlement
agreement has attractive merits and your cargo insurers should carefully consider
accepting this.

For further questions about this you should refer to Albatross directly especially if you do
not have marine cargo insurance.

Please ensure that the Container number and Bill of Lading number are shown on the
forms and are quoted in all correspondence.

11. How long will it take for the completion of the Salvage or General Average case?
There is no particular set time or period as such. The collection of all relevant
documentation and the subsequent calculations will take some time. The Adjuster will
write to cargo interest once the Salvage/ Adjustment amount is finalized.

12. What is General Average?

General Average is a long established, internationally-recognized legal procedure where
the vessel owners, charterers and cargo owners are required to share the cost of “any
extraordinary sacrifice or expenditure . . . voluntarily and reasonably made or incurred in
time of peril to preserve the ship and cargo.” The costs the vessel owners will claim will
likely include certain salvage-related and other expenses necessary to recover and repair
the vessel and complete the voyage. All property owners involved in the casualty including
the owners and charterers of the ship itself and the owners of all cargo and containers on
board at the time of the casualty and salvage share these costs in the proportion that their
own particular property (vessel, bunkers, cargo, etc.) bears to the total value of all the
property put together.

13. What is salvage?

Salvage is the practical operation needed to protect and recover the ship and its cargo
3
Incident on APL VANCOUVER Voyage 0IS1JW1PL

and everything else on board.

The owners and Salvage Company have signed the Lloyd’s Open Form. The salvage
contract establishes a right of the salvage company to place a lien on the ship and its
cargo to assure payment and compensation for the salvage services. Traditionally, the
vessel owners, charterers and cargo interests will contribute to an eventual salvage award
under a formula similar to the general average cost sharing mechanism. However, in this
situation, the salvage company has an agreement (Pre-settlement Agreement) with the
Owners/their insurers that would remunerate Salvors a fixed rates for assets deployed in
the operations plus a 25% uplift. That is to say, there is a cap to their costs.

If you are not sure please ensure you seek legal advice

14. I am not aware of any contract addressing General Average or salvage. What
contracts apply to this situation?
General Average and salvage are addressed in the CMA CGM bill of lading in several
places, including Clauses 14 and 24. The terms and conditions of the CMA CGM bill of
lading are available for review on the CMA CGM website.

15. In case that vessel is not recovered, will the value of cargo be paid to
consignee by CMA CGM ?
In the event that the vessel and cargo are lost, CMA CGM reserves the right to assert
appropriate defenses under applicable law, including but not limited to limitation of
liability.

16. Am I going to get back what I pay for the freight if I lose the cargo?
Freight is payable to the ocean carrier upon receipt of the cargo by the carrier at the
place of origin. In the event your cargo is lost, the freight paid by cargo interests to the
ocean carrier would be addressed as part of the cargo claim process.

17. My cargo was supposed to be discharged in India. Will I be able to collect the
containers at that location?
The vessel will call Singapore first as it port of refuge and it is planned that all cargoes
will be discharged in Singapore. The Owners have not determined where and when
cargo will be made available for pick-up. We will of course keep you apprised of
developments in this regard.

18. Who is going to pay the customer the letter of credit and L/C penalties, if any?
The costs associated with letter of credit arrangements are for cargo’s account. You should
consult your insurance carrier and/or legal representative.

19. Who is handling legal questions from CMA CGM ?

Legal questions in relating to cargo should be addressed to CMA CGM’s Claims Dept.:

4
Incident on APL VANCOUVER Voyage 0IS1JW1PL

Frederic D’ABOVILLE
Legal dept
CMA CGM HO
Email id: ho.fdaboville@cma-cgm.com

20. If I have purchased serenity coverage, will it cover GA security?

We are checking with HO and will share with you the information once available.