It was an unforgettable image: the 400-metre Ever Given cargo ship wedged diagonally across Egypt’s Suez Canal.
In March 2021, the vast vessel blocked the waterway for six days, disrupting billions of dollars in global trade, before it was freed.
The incident was back in the memory on Monday when a cargo vessel carrying Ukrainian grain to China ran aground in the canal.
Since the incident in 2021, some changes have been made, such as the start of a $10 billion canal expansion project and the Suez Canal Authority’s purchase of two powerful dredgers.
But other things have stayed the same.
In December 2021, the Panama-flagged ship returned through the canal from China to Rotterdam with an even heavier load — a reminder that ultra-large vessels will continue to use the vital transitway.
“Global trade is at worldwide highs right now. Cargo is moving through the Suez Canal at record rates,” said Salvatore Mercogliano, a maritime historian at Campbell University in North Carolina, at the time.
“In many ways, the Suez Canal is the only game in town in terms of these really large vessels going through and because it’s such a substantial shortcut between Europe and Asia,” he said.
About 12 per cent of global trade — $10bn to $12bn a day — goes through the canal.
That year saw daily transit records broken, with 87 ships crossing the waterway on September 29. In November 2021, the canal authority recorded its highest monthly revenue of $571.3 million.
With such successes, it is perhaps even more important to review the lessons learnt to avoid a scenario similar to the Ever Given grounding in the future.
A long history
Opened on November 17, 1869, the canal recently celebrated 152 years in existence. During that time, 1.4 million ships carrying 24.7 billion tonnes of cargo navigated the waterway, paying fees of $147.1bn.
There have been other instances of ships running aground and blocking the canal, but none for as long as the Ever Given. Russian oil tanker Tropic Brilliance got stuck for three days in 2004 and the Hong Kong-flagged Okal King Dor blocked transit for eight hours in 2006.
“[The Ever Given grounding] was a one-off incident, which did cause a drastic disruption to trade. But if we look realistically over the past century of the operation of the canal, there have hardly been any incidents,” said Ranjith Raja, oil research manager at Refinitiv.
In 2015, President Abdel Fattah El Sisi inaugurated the New Suez Canal, a second lane along part of the 193-kilometre waterway to allow for more ships to pass. The canal was also widened and deepened in other stretches.
Further canal expansion a necessity
The Ever Given ran aground during a sandstorm and strong winds in the southern stretch of the waterway, the longest single-lane portion.
“The most important thing is to create more two-lane segments in the canal,” said Mohamed El Wakeel, vice dean of the College of Maritime Transport and Technology at the Arab Academy for Science, Technology and Transport.
In May, the Suez Canal Authority (SCA) announced plans to widen and deepen the 30km stretch of waterway between the city of Suez and the Bitter Lake area by 2023.
Two-directional traffic in the canal lane further north will also be extended by 10km to a total length of 82km.
Container ships aren’t getting any smaller
The Ever Given is one of the largest container ships ever built, nearly as long as the Empire State Building is tall. It is right at the maximum length allowed for transit in the Suez Canal.
While its grounding brought into question whether such vessels are too big to safely operate in many ports and canals, it did not deter the construction of ultra-large ships.
“In the midst of Ever Given being stuck in the Suez, Ever Green, the ship's parent company, ordered vessels even larger than Ever Given at that same time,” said Mr Mercogliano.
As long as major passages can accommodate these larger vessels, shipping companies will continue to build them, and vice versa. In May, the Panama Canal Authority increased the maximum length of ships allowed to pass through the waterway from 367 to 370 metres.
“From a trade perspective, it makes sense to have bigger vessels, which are capable of carrying more cargo and makes the overall cost of trade significantly lower,” said Mr Raja.
There is no route like the Suez Canal
When the Ever Given got stuck, it blocked hundreds of ships on either side of the canal. Most decided to wait, rather than embark on the costlier journey around the Cape of Good Hope.
A journey from Singapore to Rotterdam takes 26 days through the Suez Canal, while the same voyage around the Cape of Good Hope would add 3,400 nautical miles and take an additional 10 days. For a large container vessel, that would mean an additional cost of $400,000 just in fuel.
“The route around Africa is really not one that’s serious because of the delays involved with it. It also exposes the ships to a very long sea voyage in rough waters,” said Mr Mercogliano, who estimates that two dozen ships blocked by the Ever Given chose that option.
Another Europe-Asia shipping route, the Russian Arctic route to the north, was heavily promoted following the Ever Given grounding.
“The Russians are very strongly trying to develop that route as an alternative,” Mr Mercogliano said. “The route is substantially shorter. However, it has limitations.”
Vessels risk hitting ice and many companies are concerned about spillages and polluting the Arctic waters, he explained.
'Complex incident'
SCA chairman Admiral Osama Rabie told students of the Naval Postgraduate Institute in 2021 that the Ever Given accident was a “complex incident”.
Two pilots are required for vessels of more than 80,000 gross tonnage in the Suez Canal. They advise the ship’s captain and guide the vessel during transit, but the ultimate responsibility remains with the captain.
“The ship’s captain doesn’t relinquish command of the vessel in the Suez Canal. In the Panama Canal, they do,” Mr Mercogliano said.
There were allegedly arguments between the pilots and the master on the bridge on the correct course of action.
“We know that this is probably more of a human error … the question is which human is the most directly responsible?” Mr Mercogliano said.
There were questions as to whether there should be crossing limitations amid bad weather.
“It’s not just the responsibility of the captain or the shipping company, but also the responsibility of the canal’s authorities towards determining what is deemed to be safe for transit,” Mr Raja said.
Marwa Maher, a media representative for the SCA, said the event was an accident and investigation results would not be made public.
The authority initially asked for $916m in compensation from the ship’s Japanese owner, Shoei Kisen Kaisha, for loss of revenue, reputational damage and the cost of the salvage operation.
They settled on a reported $540m, although the amount was not officially disclosed, after months of negotiations while the Ever Given remained impounded in the Great Bitter Lake.
In 2021, the Panama registry and insurance companies began their own investigations, which could take years.
“The liability cases against Ever Given have not been resolved yet,” Mr Mercogliano said at the time. “All those vessels that were delayed could levy suit against either the ship or the Suez Canal — whoever’s responsible.”
Mr El Wakeel, a former ship's captain, said the authority had taken corrective measures, such as upgrading its salvage equipment and continuously training pilots through simulation exercises.
“It was an important lesson, so that we are ready for anything,” he said.
This article was originally published on December 21, 2021
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
The Prison Letters of Nelson Mandela
Edited by Sahm Venter
Published by Liveright
What can victims do?
Always use only regulated platforms
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Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
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Courtesy: Crystal Intelligence
MATCH INFO
Day 2 at Mount Maunganui
England 353
Stokes 91, Denly 74, Southee 4-88
New Zealand 144-4
Williamson 51, S Curran 2-28
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1st Test England win by 211 runs at Lord's, London
2nd Test South Africa win by 340 runs at Trent Bridge, Nottingham
3rd Test July 27-31 at The Oval, London
4th Test August 4-8 at Old Trafford, Manchester
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Score
Third Test, Day 2
New Zealand 274
Pakistan 139-3 (61 ov)
Pakistan trail by 135 runs with 7 wickets remaining in the innings
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match info
Chelsea 2
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Wolfsburg v Cologne (5.30pm)
Mainz v Arminia Bielefeld (5.30pm)
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RB Leipzig v Bayern Munich (8.30pm)
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VfB Stuttgart v Werder Bremen (5.30pm)
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Trans fat is typically found in fried and baked goods, but you may be consuming more than you think.
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Starring: Amir El-Masry, Pierce Brosnan
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Top investing tips for UAE residents in 2021
Build an emergency fund: Make sure you have enough cash to cover six months of expenses as a buffer against unexpected problems before you begin investing, advises Steve Cronin, the founder of DeadSimpleSaving.com.
Think long-term: When you invest, you need to have a long-term mindset, so don’t worry about momentary ups and downs in the stock market.
Invest worldwide: Diversify your investments globally, ideally by way of a global stock index fund.
Is your money tied up: Avoid anything where you cannot get your money back in full within a month at any time without any penalty.
Skip past the promises: “If an investment product is offering more than 10 per cent return per year, it is either extremely risky or a scam,” Mr Cronin says.
Choose plans with low fees: Make sure that any funds you buy do not charge more than 1 per cent in fees, Mr Cronin says. “If you invest by yourself, you can easily stay below this figure.” Managed funds and commissionable investments often come with higher fees.
Be sceptical about recommendations: If someone suggests an investment to you, ask if they stand to gain, advises Mr Cronin. “If they are receiving commission, they are unlikely to recommend an investment that’s best for you.”
Get financially independent: Mr Cronin advises UAE residents to pursue financial independence. Start with a Google search and improve your knowledge via expat investing websites or Facebook groups such as SimplyFI.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5