Aground On The Suez Canal, The Largest Container Ever Given Ship Was Insured For Hundreds Of Millions Of US Dollars

Suez Canal. (Wikimedia Commons / Mmelouk)

JAKARTA - Ships in Egypt's Suez Canal were diverted to an older channel on Wednesday 24 March, after a large container ship ran aground, blocking ships passing through one of the world's most important waterways.

The ship in question is Ever Given, one of the largest container ships in the world weighing around 224 tonnes, 400 m (1,312 ft) wide 59 m (193 ft) long, and capable of carrying shipping containers up to 20,000 equivalent 20 feet (TEU), ran aground around the clock. 05.40 GMT.

The Suez Canal Authority (SCA) is continuing to try to rebalance the ship, and local sources say efforts could shift towards excavating the ship if the tugboats are unable to release it.

SCA chief Osama Rabie told local media there was a blockage, the convoy to the south was moving and that authorities were trying to keep traffic flowing between the waiting areas as best they could while rescue efforts continued.

“After we take out this boat, that's all, everything will be back to normal. God willing, we will finish today. Authorities are considering compensation for the delayed vessels", he said.

Dutch marine services company Boskalis said its subsidiary Smit Salvage had been hired to help with the operation and sent 10 people to Egypt.

"In such a case, you really have to do the calculations to understand how strong he is grounded, and how much power you can use without damaging the ship," Boskalis spokesman Martijn Schuttevaer told Reuters.

As a result of this incident, about 30 ships were detained north of Ever Given and three ships on the south side. Meanwhile, dozens of other ships were also waiting on the north and south sides of the entrance to the Suez Canal. Several tankers are also known to have been affected by this incident.

As of Wednesday, five liquefied natural gas (LNG) tankers were unable to pass through the Suez Canal, according to data intelligence firm Kepler. Kepler analyst Rebecca Chia said three ships headed to Asia while the other two went to Europe. She said, if the congestion continued until the end of this week, it would have an impact on the transit of 15 LNG tankers.

During 2020, nearly 19,000 ships, or an average of 51.5 per day, passed through the canal, according to the SCA. Oil analysis firm Vortexa said ten tankers carrying 13 million barrels of crude could be affected. Oil prices rose more than 2%.

If Ever Given remains on hold for up to 48 hours, according to Niels Madsen, Vice President of Products and Operations at Sea-Intelligence at Denmark-based, the impact will be limited to the gradual delays of already very bad ships.

"However, if on the other hand the Suez Canal remains blocked for another 3-5 days, then this will start to have very serious global consequences", she said.

Ever Given container ship. (Wikimedia Commons/kees torn)

Bernhard Schulte Shipmanagement (BSM), who is responsible for the crew and technical issues of the ship, said that his party immediately carried out an investigation. All crew members are said to be safe, there are no reports of injuries

BSM, which handles crew and technical issues, said all crew members are safe and accountable and there are no reports of injuries or pollution. BSM has notified the authorities and 'interested parties'

"All parties are currently investigating the cause of this event and it is not appropriate to speculate on a specific cause at this time", BSM said by email to Reuters.

Separately, sources said the accident occurred due to bad weather. Operations to float and free the ship began on Wednesday morning deploying eight tug boats to free the ship from the Suez Canal.

Taiwan's Evergreen Marine Corp., which leases the ship under a time charter, said the ship's owner had informed the company that it was suspected of being hit by a sudden strong wind, causing the hull to deviate from the waterway and accidentally hit the bottom and ran aground.

The ship's owner, Japanese firm Shoei Kisen KK, and its underwriters could face claims from the Suez Canal Authority (SCA) for lost revenue and from other vessels whose lines have been disrupted, insurers and brokers said. Shoei Kisen could not be reached for comment.

A container ship of this size is likely to be insured for hull and engine damage of $ 100-140 million, or around IDR 2,022,090,000,000, insurance sources said. Meanwhile, another source said the ship was insured on the Japanese market, two sources said.

The cost of the rescue operation is also covered by the hull and engine insurance company.

"This has the potential to be the biggest container ship disaster in the world without a ship exploding", said a shipping attorney, who declined to be named.