Who pays for Suez Canal blockage?
Egypt lost around $14 million in revenues for each day the waterway was closed
The maritime traffic jam on both ends of the Suez Canal eased further on Friday, four days after the dislodging of a massive containership that had blocked the waterway.
On March 29, salvage teams freed the skyscraper-sized Ever Given, ending a crisis that had clogged one of the world’s most vital waterways and halted billions of dollars a day in maritime commerce. At the time, canal officials said that more than 420 ships had been waiting for the Panama-flagged, Japanese-owned ship to be freed so they could make the crossing.
Lt Gen Osama Rabie, head of the Suez Canal Authority said 80 cargo ships carrying a total load of 4.7 tons transited through the canal on Friday, including the American aircraft carrier USS Dwight D. Eisenhower.
“This proves the global maritime community has great faith in the Suez Canal and Egypt’s ability to guarantee safety and security to different types of vessels,” Rabie was quoted in a statement.
The Ever Given had crashed into a bank of a single-lane stretch of the canal about 6 kilometres (3.7 miles) north of the southern entrance, near the city of Suez.
Egypt lost around $14 million in revenues for each day the waterway was closed, according to rough estimates from Suez Canal Authority. The crash created a massive traffic jam that held up $9 billion a day in global trade and already strained supply chains.
The blocking of the Suez Canal and the resulting disruption to global shipping is likely to cause a large loss event for the reinsurance industry, Fitch Ratings says. Accidents involving large container ships can cause property claims of over USD1 billion, but these are mostly related to salvage. As Ever Given should still be able to travel once freed, claims related to hull and cargo insurance, including salvage (which will be borne by the shipowner’s hull insurer), should remain significantly below this level.
However, the ship’s owner Shoei Kisen Kaisha protection and indemnity club will probably also face claims from the owners of the cargo on the Ever Given and of the other ships that are blocked in the Suez Canal for losses related to perishable goods and supply chain disruptions.
Egyptian government officials, insurers, shippers and others similarly waited for more details about what caused the skyscraper-sized Ever Given to become wedged across the canal on March 23.
When blame gets assigned, it will likely lead to years of litigation to recoup the costs of repairing the ship, fixing the canal and reimbursing those who saw their cargo shipments disrupted. Since the vessel is owned by a Japanese firm, operated by a Taiwanese shipper, flagged in Panama and now stuck in Egypt, matters quickly become an international morass.
“This ship is a multinational conglomeration,” said Capt. John Konrad, the founder and CEO of the shipping news website gcaptain.com.
Shoei Kisen Kaisha Ltd. is covered with some $3 billion in liability insurance through 13 Protection & Indemnity Clubs. Those clubs are not-for-profit mutual insurers used by the vast majority of global shipping firms.
It now seems like freeing up Ever Given was the easy part but finding out the exact reason for the blockage and settling all litigations and claims is going to be a long-drawn process.
(With inputs from agencies)
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