The UK P&I Club, an insurer of the Ever Given, is reporting an agreement has been reached with the Suez Canal Authority (SCA) and the container ship could be released from custody in Egypt soon.
That’s good news for owners of the cargo aboard the Evergreen Marine-operated vessel, which was en route from Yantian, China, through the Suez Canal to the Port of Rotterdam in the Netherlands on March 23 when it was reportedly hit by strong winds and ran aground. It became stuck sideways in the Suez Canal, blocking both northbound and southbound traffic.
The Ever Given was freed on March 29 and moved to Egypt’s Great Bitter Lake, where it has remained detained while the SCA, the ship’s owner and insurers have negotiated a settlement to release the vessel and get its cargo moving again.
American Shipper’s Lori Ann LaRocco reported the 2018-built Ever Given, with the capacity to carry 20,000 twenty-foot equivalent units (TEUs), was about 85% loaded at the time of the grounding, and electronics, machinery and parts, household goods, furniture, and footwear made up the largest product categories on board.
“Following extensive discussions with the Suez Canal Authority’s negotiating committee over the past few weeks, an agreement in principle between the parties has been reached,” said the announcement Wednesday from the UK P&I Club. “Together with the owner and the ship’s other insurers, we are now working with the SCA to finalize a signed settlement agreement as soon as possible. Once the formalities have been dealt with, arrangements for the release of the vessel will be made.”
The SCA initially had sought $916 million for damage to the Suez Canal and the loss of business caused by the Ever Given blockage. Within three days of the Ever Given’s grounding, the traffic jam at both ends of the canal had grown to more than 230 ships. By March 29, 367 ships reportedly were at anchor waiting to transit the Suez Canal.
The amount that will be paid to the SCA for the Ever Given’s release has not been disclosed, and the UK P&I Club said all parties had agreed details of the negotiations would remain confidential. But some sources are speculating a settlement amount of $150 million.
Jonathan Kempe, the founder and CEO of Sydney-based Verifai, a technology security firm, wrote on LinkedIn Wednesday, “If the final amount paid is $150 million, then could this have been resolved months ago, with a comparable penalty and a 12-month (volume-based) trailing commission applied? The more freight moved, the greater the return, which in this environment would be very profitable!”
The amount of compensation to the SCA reportedly had been the major sticking point in the negotiations.
“The Ever Given’s owners and their P&I and hull and machinery insurers fully acknowledge the SCA is entitled to compensation for their legitimate claims arising out of this incident. We have insured the vessel for certain third-party liabilities of the SCA’s claims,” the UK P&I Club said in a June 3 statement.
The owner of the Ever Given, Shoei Kisen Kaisha, had appealed an Ismailia Court order from early May that it would have to pay “SCA’s full claim of $916 million instead of releasing the vessel based on security for the claim being provided.”
The UK P&I Club had argued that the SCA had “not provided a detailed justification for this extraordinarily large claim. The grounding resulted in no pollution and no reported injuries. The vessel was refloated after six days and the Suez Canal promptly resumed their commercial operations. The P&I aspects of the claim are relatively modest, with the exception of a claim for loss of reputation, which is disputed.”
Lars Jensen, CEO of consultancy Vespucci Maritime, reacted to word of an agreement on LinkedIn Wednesday that it was “a day of good news. First came the news of Yantian reverting back to full normal operations [beginning Thursday] and now there is light at the end of the tunnel for the shippers with cargo on board the Ever Given as well.
“Not that this means the industry becomes normal immediately, but following months of a continued stream of disruptive events, it is good to also see a couple of elements pull in the right direction,” Jensen wrote.