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Egypt could ask for up to $1 billion for Ever Given crisis

A handout picture released by the Suez Canal Authority on March 24, 2021 shows a part of the Taiwan-owned MV Ever Given (Evergreen), a 400-metre- (1,300-foot-) long and 59-metre wide vessel, lodged sideways and impeding all traffic across the waterway of Egypt’s Suez Canal.

Suez Canal Authority | AFP | Getty Images

CAIRO — Egyptian authorities may seek over $1 billion in damages for helping to clear the Ever Given from the Suez Canal, as a dilemma emerges over who might foot the bill.

“We will reach over a billion dollars in compensation,” Osama Rabie, the chairman and managing director of the state-owned Suez Canal Authority, told Egypt’s Sada El Balad channel on Wednesday evening. 

Rabie said the figure is based on canal revenue losses, the cost of equipment and machinery, and the manpower hours for the 800 rescuers who freed the ship.

“We will ask for a fair amount,” Rabie said, according to a NBC News translation, without specifying who might be liable to pay. 

“We saved them so much by rescuing the ship without any major damage or losses,” he added. 

“The whole ship could’ve been lost.” 

The 200,000 ton mega-container carrier was successfully refloated on Monday, six days after coming stuck sideways in the Suez Canal. The incident sparked a crisis in international shipping, held up $9 billion in global trade a day and left 422 vessels carrying everything from crude oil to cattle waiting to pass.

Authorities said the backlog would be cleared by Saturday, but the maritime traffic jam could have long lasting repercussions on ports and supply chains worldwide.

Rabie said he hoped a compensation agreement could be reached “in two or three days” and if not, Egypt might hold the ship in the Great Bitter Lake, north of the Suez Canal, where it is currently undergoing maintenance checks.

“We could agree on a certain compensation, or it goes to court,” he said. “If they decide to go to court, then the ship should be held,” he warned. 

First-hand accounts

Investigation underway

Insurance claims

The incident has put the opaque world of shipping in the spotlight. At the time of the incident, the Ever Given was owned by a Japanese company, chartered by a Taiwanese conglomerate, managed by German operators, sailed by a crew of Indian nationals, registered in Panama and transiting in Egypt.

The layers of responsibility add to the complexity, according to Brian Schneider, a senior director at the Insurance division of Fitch Ratings. 

“My assumption is the $1 billion refers to their estimate of total losses from the event and not any specific compensation to the Suez Canal Authority,” Schneider told CNBC via email on Thursday. 

“I expect that the insurance industry loss will more likely be in the low hundreds of millions of dollars given that the vessel was freed in six days,” Schneider added, saying the loss could have reached $1 billion had the ship needed to be unloaded as goods spoiled and insurers faced loss of revenue claims. 

“SCA’s claims should be more limited to the canal damage and salvage operation,” he said. 

Meanwhile, a spokesperson for the ship’s operator, Bernhard Schulte Shipmanagement, told CNBC: “Ongoing investigations will determine the numerous factors involved in this incident and all claims will be considered on a case by case basis.”

Taiwan’s Evergreen Marine Corp has reportedly said it is not responsible for any delays of the cargo it was transporting, while the owners, Shoei Kisen, told Bloomberg that it will discuss compensation with the Canal Authority, but will refrain from giving details at this moment in time.

Read More: Egypt could ask for up to $1 billion for Ever Given crisis

2021-04-01 23:55:58

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