Insurance claims related to the blockage of the Suez Canal for almost a week are expected to be in excess of $100 million, according to experts.
Ever Given, the 200,000-tonne ship carrying 20,000 containers, got stuck in the Suez Canal on March 23 after high winds blew it off course, blocking a vital waterway for global trade. Although the ship was refloated on Monday, the backlog of vessels on either side of the busy waterway connecting Europe and Asia is expected to take three days to clear.
"We estimate insurance cost claims in excess of $100m, relating principally to delays to cargo delivery, the Suez Canal Authority's claim for loss of revenue and the actual cost of removing the ship," Martin Dixon, director and head of research products at UK-based shipping consultancy Drewry, told The National.
Crew burst into song as Ever Given is freed
The Suez Canal Authority, which owns and operates the canal, is expected to have lost more than $95m in fee revenue during the six days the waterway was blocked, according to financial data company Refinitiv. At least 400 ships were stranded on either side of the canal following the incident.
“The main type of claim outside the removal cost of the ship itself will be cargo owners’ claims against the shipping line [Evergreen] relating to delayed delivery of the containers on the Ever Given. The shipping line may, in turn, claim against the ship owner and the latter the technical manager. All such claims will be made via insurers,” Mr Dixon said.
The ship is owned by Japanese company Shoei Kisen and is operated by Evergreen Marine of Taiwan.
The Suez Canal Authority's chairman, Adm Osama Rabie, said it "is not to blame for the incident,” at a news conference on Monday night.
“We are the injured party,” he added, saying the canal suffered $12m-$15 per day in lost revenue.
A total of 18,597 ships made the transit through the canal in 2020 with 50 ships passing through it every day.
“As we speak now, it is difficult to predict what the overall insurance losses would be,” Capt Abhijit Naik, Middle East and North Africa marine practice leader at global insurance broker Marsh, said.
However, he said the biggest claims will come from ships that were delayed as a result of the blockage or the canal authority.
“Ships which were stuck can claim for their loss of revenue," he said, arguing that the ship owner was the most likely recipient of claims.
The incident has put additional pressure on the global supply chain, which was already impacted due to the coronavirus pandemic, Capt Naik added.
“The world should be more equipped to salvage these kinds of vessels if and when something goes horribly wrong.”
Fitch Ratings said the incident is also likely to trigger losses in the reinsurance industry.
"This event will reduce global reinsurers’ earnings but should not materially affect their credit profiles, while prices for marine reinsurance will rise further as a consequence," the ratings agency said.
How the 'Ever Given' blocked the Suez Canal for almost a week - in pictures
