The Suez Canal Authority (SCA) have seized the Ever Given following the blockage of the Suez Canal for nearly a week in March. The Evergreen vessel has been under inspection in the Great Bitter Lake since it was freed from the Suez Canal on Monday 29th March, but has yet to discharge any cargo.
Earlier this week, the SCA formalised their promise to seek compensation by obtaining a court order on Monday 12th April, before arresting the vessel on Tuesday 13th April. The 25 crew members have also been refused discharge, with the exception of 2 who were granted permission following a plea for personal circumstances.
The Suez Canal Authority are currently seeking $916 million for damages, the salvage operation and loss of reputation. Evergreen released a statement on Wednesday 14th April advising that the SCA’s claims are “largely unsupported and lack any detailed justification”.
Who will pay the costs to the Suez Canal Authority?
Shoe Kisen, the owner of the Ever Given, declared general average on Thursday 1st April. General average is where everybody involved in the voyage, including vessel owners, charterers and cargo owners, all incur additional costs in the event of an emergency.
General average usually takes years to finalise due to the 1000s of consignments, and claims, that have to considered in the calculation. Each consignment must be valued (undamaged, as per the invoice), assigned a compensation amount (% of the value) and offset against any losses to get the final value that must be paid by the cargo owner.
Whilst general average is calculated and collected from all parties, standard procedure is for the insurers to settle a bond amount in the interim. As the bond amount remains under dispute, no amount will be paid to the Suez Canal Authority and negotiations will continue.
What will happen to the cargo on the Ever Given?
In their statement on Wednesday 14th April, Evergreen have advised that they are investigating the possibility of the vessel and the cargo being treated as separate legal entities. A source that is directly involved has since informed the Wall Street Journal that Evergreen are considering removing the cargo from the vessel for onward carriage.
Removal of the containers would either require specialised floating equipment and specialised chartering of empty vessels, or for the vessel to be removed from its current location to port. The closet port to the Ever Given is Port Said, but it has not confirmed that this would be the port of discharge if Evergreen choose this option.
If Evergreen decide to remove the cargo from the vessel, the Ever Given will incur significant additional delays and continue to pull additional resources from the local area. The quickest, and easiest solution, would be for the Suez Canal Authority to agree a settlement and allow the Ever Given to continue to Rotterdam.
The lasting effects of the Ever Given being stuck remain to be seen as the vessel, cargo and equipment owners are all waiting on resolution with the Suez Canal Authority. If you’d like the latest information, or an opinion from one of our industry experts, please contact us today.