The Billion Dollar Blockage


Drew Pellin, Contributor

The Ever Given, a massive container ship, wound up stuck in the Suez Canal on March 23rd. The canal connects the Mediterranean Sea with the Red Sea, delivering a route that amounts to 12% of the world’s cargo. During this six-day blockage, it delayed more than 400 ships, estimating a loss of $400 million per hour in international trade, according to the German insurer Allianz. The 224,00-ton cargo ship was caught in high winds in a narrow section of the canal, grounding the bow in the canal’s bank. After days of dredging, a dozen tugboats pulled the ship free. However, the vessel is a multinational apprehension. The Ever Given is owned by a Japanese firm, operated by a Taiwanese shipper, operated by an Indian crew, and flagged in Panama. The ship has still not been able to leave the Suez Canal, with 25 crew members stuck on board.

After weeks of desperately trying to get the vessel out of the Suez Canal, Egyptian authorities are not allowing the Ever Given to leave. Egypt seized the ship, calling for an amount of $900 million in damages. They announced that the compensation is for the lost revenue from blocking other vessels as well as damage and labor costs involved in the six-day frenzy to free the ship. Ever Given ship owner, Shoei Kisen Kaisha has fully cooperated in the investigation as legal battles have already started. Kaisha has filed suit against the Taiwan-based operator, Evergreen Marine Corp, in the United Kingdom’s High Court in effort to limit liability. Evergreen denied responsibility for the financial losses caused by the blockage, stating that the $900 million claim was “largely unsupported” and without “detailed justification,” according to the Ever Given’s insurer. Kaisha has also declared “general average,” a maritime legal clause providing that if an intentional sacrifice is made for the safety of the crewmembers and cargo, all parties involved share the cost of the ship’s recovery and losses.

Companies have started to come forward on the potential impact the blockage had on their operations. However, Evergreen has not released whose shipments are on the Ever Given. The shipping industry has already been struggling in 2020 due to capacity constraints and disruptions caused by the Covid-19 pandemic. La-Z-Boy Inc, an American furniture manufacturer, came right out and stated that they had five containers on the ship. Aldi, a discount supermarket, came forward on Facebook concerning a backup of some products. The grocer hinted that the product backup was due to the Suez Canal blockage, stating “We’re sorry, the Special Buys you’re looking for may have been delayed due to current events.” The Suez Canal shutdown added to the rising costs for cargo owners in the already strained industry.

Evergreen is looking into other solutions as the vessel remains stuck in legal battles. The company is facing immense pressure to deliver the thousands of containers stuck on board to its irritated customers. The operators of the Ever Given ship are considering removing the containers from the vessel to get the products moving on to make it to their final destination. However, removing the containers offers huge physical and logistical challenges, such as more legal headaches and fees. One option proposed was deploying empty vessels to pick up the containers aboard the Ever Given as they cross through the Suez Canal in route to Europe.

The grounding of the Ever Given is still under investigation as to what caused the blockage. The Ever Given’s insurer stated “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,” calling for their ship to be given back. The vessel was also deemed safe to sail by the American Bureau of Shipping, with the hopes that the Ever Given can start to make the journey to its final destination.