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CMA CGM levies war risk surcharge for cargo crossing the Persian Gulf

ATTACKS on two oil tankers in the Strait of Hormuz have led French shipping giant CMA CGM to introduce a war risk surcharge (WRS) for cargo to and from ports in the Persian Gulf, as insurance underwriters hike premiums for ships transiting this 'tinderbox' region

CMA CGM levies war risk surcharge for cargo crossing the Persian Gulf

ATTACKS on two oil tankers in the Strait of Hormuz have led French shipping giant CMA CGM to introduce a war risk surcharge (WRS) for cargo to and from ports in the Persian Gulf, as insurance underwriters hike premiums for ships transiting this 'tinderbox' region

03 July 2019 - 19:00

ATTACKS on two oil tankers in the Strait of Hormuz have led French shipping giant CMA CGM to introduce a war risk surcharge (WRS) for cargo to and from ports in the Persian Gulf, as insurance underwriters hike premiums for ships transiting this 'tinderbox' region.

Since the attack on two tankers war-risk premiums have soared for the region with one broker saying that supertankers are being charged a US$200,000 additional premium (AP ) per voyage, The Loadstar of UK reported.



AP is typically charged as a percentage of the hull value and for additional war risk liability for crew and cargo value.



CMA CGM and subsidiary APL will charge a WRS of $36 per TEU from tomorrow (July 5) for all Persian Gulf trades, except the US and China where it will take effect on August 1.



The French carrier said the charge, which is non-negotiable, was necessary, 'considering the recent incidents in the Strait of Hormuz and the related significantly increasing insurance costs in the Middle East Gulf region'.



In addition it said that to ensure the safety of its crew, as well as the goods onboard, it had taken 'critical measures such as vessel speed escalation in the day and avoiding night sailing through vulnerable areas'.



In its circular to the trade on May 17, the Joint War Committee (JWC), an industry body that advises insurers, officially identified the region as a high-risk area, but it was only after oil tanker Front Altair and product carrier Kokura Courageus were badly damaged by a mortar or torpedo within hours of one another on June 13, that war-risk costs have spiralled. The 'high-risk' classification from the JWC gives underwriters the right to hike premiums.



In the immediate aftermath of the attacks, which forced the crews of both tankers to abandon ship, many owners were reluctant to send vessels to the region. Indeed, MOL ordered all its ships - other than those seconded to merged container carrier ONE - to maintain a 12-mile radius from the zone.



Shipping association BIMCO agreed that shipping companies should consider diverting vessels from the area. It said: 'Tensions in the strait and the gulf are now at the highest they can be without an actual armed conflict.'



Last month, MSC, which has so far not advised customers of a WRS in the Persian Gulf, applied a WRS of $150 per TEU on cargo to and from Venezuela in response to 'political volatility in that country'.


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