Suez Canal: With ship now freed, maritime experts, insurers question what went wrong

…Litigation to recoup costs could take years

…Lesson to more expertise in maritime industry – Nigerian professional

Ben Eguzozie, in Port Harcourt

As lines of ships began sailing again through the Suez Canal on Tuesday, the artery linking Africa with the Mediterranean and Red Seas, reports said at least 367 vessels carrying various types of goods including crude oil, cattle, were still queued up waiting for turns to sail through the canal. This process will take several days before the canal can return to its normal daily business of handling 50 vessels on the average.

Maritime experts, insurers, shippers and other stakeholders, including the Egyptian government officials, are waiting for details from a probe into what actually caused the mammoth, skyscraper-sized ship, MV Ever Given, to become wedged across the 193-km canal on March 23, until its refloating on March 29.

The investigation will lead to blame. And when blame gets allocated, it would likely trail off litigation that would take years to conclude to recoup the costs of repairing the ship, fixing the canal’s damaged portion, and compensating those whose cargo shipments were disrupted. The canal, opened in 1869, today handles 12 per cent of world trade and 30 per cent of global shipping volume. The CNN said the canal handles 5.2 million barrels of crude daily, and 3.2 million tons of cargo a day.

It would likely be an international legal process: the vessel is owned by a Japanese firm, Shoei Kisen Kaisha Ltd; operated by a Taiwanese shipper, Evergreen Marine Corporation; flagged in Panama, and stuck in Egypt.

Shipping expert at gcaptain.com, a shipping news provider, John Konrad adduced that MV Ever Given is a “multinational conglomeration.”

Since experts said Suez Canal handles $10 billion daily in global trade and supply chains, and the blockage by the colossal container ship lasted about seven days – it follows that $70 billion was lost in the quagmire.

Ship damage?

On Tuesday, experts went to the scene where MV Ever Given ran aground, looking for signs of damage, and to determine why the 220,000-ton vessel ran aground. They opine that there could be substantial damage to the container vessel. Having been stuck for days across the canal, the vessel’s middle rose and fell with the tide, bending up and down under the tremendous weight of the 20,000 containers across its 403-meter length (equivalent to quarter mile). By the time engineers refloated the ship on Monday afternoon, all that pressure came forward to its bow.

According to Konrad, who is the chief executive of gcaptain.com, investigators could check for Ever Give’s structural integrity and mechanical equipment: “They have to check everything for cracks and particularly that rudder and the propeller in the back that’s connected to the engine room… make sure they test the engines, all the safety valves, all the equipment, and determine that it’s safe to sail either by itself or with tug escort to the next port,” he told the Associated Press.

Investigators would look into grounding of the container vessel which had halted billions of dollars a day in maritime commerce, analysts expect it would take at least another 10 days to clear the ship sail backlog. But Egypt’s president, Abdel Fattah Al-Sisi said on Tuesday it would take only three.

Feast of lawsuits and insurance claims

Analysts say the losses to shippers (and by extension the disruptions to world trade and supply chains), physical damage to the ship (MV Ever Given) will likely see lawsuits. It is yet too early to determine how much all these would come up to.

Clyde and Co. global legal firm, said, MV Ever Given’s owner, Shoei Kisen Kaisha would likely pay Egypt’s Suez Canal Authority (SCA) for the assistance it had already rendered to refloat the massive vessel.

Clyde and Co. also said SCA could fine MV Ever Given (possibly for destroying its canal and inflicting repair costs). But the vessel is covered with $3 billion in liability insurance through 13 Protection & Indemnity Clubs (P&I Clubs). The clubs which are non-profit mutual insurers, are used by the vast majority of global shipping firms.

It is yet unknown if lawsuits would be filed by other vessels which by avoiding the endless queue up at Suez Canal, took the long, alternate route around the Cape of Goof Hope at Africa’s southern tip – a 5,000-kilometer detour which costs ships hundreds of thousands of dollars in fuel and other costs.

Egypt’s capacity for Suez emergency rescue

By far, the unprecedented Suez Canal shutdown raised fears of extended delays, goods shortages and rising and rising costs for consumers, added to strain on global shipping industry, already under pressure from the Covid-19 pandemic.

Segun Adekunle, a Nigerian maritime professional raised the question of Egypt’s capacity for emergency rescue on its canal waterway, described by President Al-Sisi as “Egypt’s lifeline of peace, prosperity and development,” from where it had extracted several hundreds of millions of dollars in revenues for more than a century-and-a-half. For the canal’s six-day blockage, the country lost $95 million in revenues. Adekunle feels it’s time the country prepared a fool proof capacity for Suez’s emergency rescue, in the event of another wedge.

Adekunle also said, it was time the global maritime regulators brought in more expertise in the industry, which he said, was amongst, if not the world’s most regulated sector, with various conventions, publications and adjustments enacted to maintain its safety.