Suez Canal Authority may seek $1bn in compensation following obstruction

Chief executive of the Suez Canal Authority (SCA), Osama Rabie, announced late last night that the state-owned organisation may seek roughly $1bn in compensation. This follows the canal’s six-day obstruction by container ship Ever Given, which held up at least 369 other vessels and blocked $9.6bn of global trade.

Explaining why compensation may be sought, Rabie cited the reputational damage the incident had inflicted on Egypt. He told Egyptian TV channel Sada Elbalad “This country should get its due”.

Rabie did not clarify from whom the compensation would be sought. The Taiwanese company that charters Ever Given, Evergreen Marine Corporation, has insisted it is not responsible for delays in the cargo it was transporting.

Instead, it has claimed that the Japanese firm which owns the vessel, Shoei Kisen Kaisha, is responsible for any losses.

In turn, Shoei Kisen Kaisha said that it is the responsibility of charterers to deal with the losses.

It had apologised for “causing a great deal of worry to ships in the Suez Canal” while Ever Given was still causing the blockage.

Indian financial paper Mint reported that there could be thousands of insurance policies taken out on the shipping containers packed on Ever Given. This could result in millions of dollars’ worth of payouts.

Rabie’s $1bn figure is a rough estimate of the losses that arose from the efforts to dislodge Ever Given. These include equipment and labour costs, transit fees and damages which the efforts incurred.

The SCA worked with Dutch company Smit International to dislodge the ship. Smit International is a subsidiary of Royal Boskalis Westminster, which boasts one of the largest dredging fleets in the world.

Working alongside Japanese workers, 14 tugboats, as well as a team of dredgers and diggers, were able to refloat the ship on 29 March.  

The Egyptian government requires a ‘Suez crew’ to board all vessels whilst on the canal to take over from the regular captain and crew. As such, two pilots from the SCA were onboard Ever Green when the incident occurred on 23 March.

Usually, around 50 ships pass through the canal a day, representing roughly 12% of global trade.

Featured Image: Wikimedia Commons

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