After being bottlenecked in Suez Canal for days, cargo ship owner may face massive insurance claims

Business Insider US
Ever Given, the large yellow vessel pictured, stuck in the middle of the Suez Canal and surrounded by smaller cargo ships.

The owners and insurers of Ever Given, the massive cargo ship wedged in the Suez Canal for multiple days, may face a mountain of insurance claims, according to a new report.

According to Reuters, the owners and insurers of the 400m-long ship could already be facing millions of dollars of insurance claims when the ship is eventually refloated, mainly due to the costs of the salvage operation as well as the trail of global shipment delays caused by the blockade.

The ship lost control of its steering early Tuesday, and wound up nearly perpendicular in the Suez Canal, effectively blocking traffic both ways completely.

On Tuesday and Wednesday, salvage efforts from smaller tugboats and excavators along the Suez Canal's banks were unsuccessful, and authorities said that those efforts would resume early Thursday, with an "elite salvage squad" joining in from the Netherlands.

According to Reuters, the ship is owned by Japanese firm Shoei Kisen KK, and the firm's insurers could have to deal with claims from the Suez Canal Authority due to loss of revenue from the at least 30 ships unable to deliver goods.

"All roads lead back to the vessel," David Smith, head of marine and cargo at insurance broker McGill and Partners, told Reuters.

"It is potentially the world's biggest ever container ship disaster without a ship going bang," a shipping lawyer who declined to be named told Reuters.

The report added that the ship was insured in the Japanese market and was likely insured for $100-140 million worth of machinery damage.

Other ships will likely tag on insurance claims from the ship's insurer due to losses to goods on board, many being perishable, as well as delayed deliveries.

"If you have a constant build-up of ships, there are massive supply chain issues," Marcus Baker, the global head of marine and cargo at insurance broker Marsh, told Reuters.

And the jam is already creating rippling economic impacts, during a year full of supply-chain disasters, with Oil prices rising close to 4% on Wednesday, only 24 hours after the port was blocked.

The report added that more than twenty oil tankers have been affected by the logjam.

Bernhard Schulte, the technical manager of Ever Given, told Insider that, "there have been no reports of injuries, pollution or cargo damage and initial investigations rule out any mechanical or engine failure as a cause of the grounding."

And once the ship is fully refloated, "the vessel will undergo a full inspection and BSM will cooperate fully with the relevant authorities on reports of the incident," according to the statement.

Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo