Egypt Seeks $1 Billion In Compensation For Suez Canal Blockage

Ripples of the Ever Given cargo ship grounding in the Suez Canal is beginning to be felt. As experts all over the world are analysing the losses, compensation claims are already making their way with Egypt claiming a $1 billion compensation.

According to statements issued by the top officials of Suez Canal, ” Egypt is expecting more than $1 billion in compensation after the cargo ship blocked the Suez Canal for nearly a week, stopping ship traffic”. Once the issue gets to the court, the ship and its cargo might not be allowed to leave Egypt.

Compensating for Revenue Loss & Salvage Costs

Lt. Gen. Ossama Rabei, the Head of the canal authority revealed the extent of the problem when he spoke to a pro government TV channel. According to his statement, the compensation will account for the cost of the salvage operation, the stalled traffic and also the week’s revenue transit loss encountered by the Suez Canal last week.

Image Credits: suezcanal.gov.eg

Rabei termed it as the country’s right. However, he fell short of underlying who will it be addressed to. He highlighted the good relationship of shipowners and canal authorities.

Litigation Will Restrict Ship Crew in Egypt

Presently, Ever Given is under inspection in the Suez Canal’s holding lakes where investigation is ongoing to determine the cause of grounding.

As per the statement issued by the ship’s management company, Bernard Schulte Shipmanagement, the Suez Canal Investigation Authorities have been given full access to the Voyage Data Recorder or the black box of the ship.

The captain and the crew are cooperating with the investigating authorities, revealed BSSM.

Rabie on the other hand has reaffirmed that once the compensation is agreed upon the ship and the crew are free to travel.

But if it amounts to a litigation case then Ever Given will be stranded in Egypt along with its $3.5 billion worth of cargo.

A litigation case in this scenario is likely to be complex as multiple parties are involved. The ship is owned by a Japanese firm but it is a Panama flagged vessel operated by a Taiwanese shipper.

Although 2 canal pilots guided the ship when it was navigating through the canal, the ultimate onus lied on the ship’s captain. Usually, ships have canal pilots onboard to guide ships through the narrow canal but they are unlikely to be held responsible for the incident.

Put Pandemic Hit Industry Under Stress

Ever Given had grounded in the southern entrance of the canal and remained stranded there till 14 tugboats pulled up its bulbous bow aided by a supermoon hightide.

This caused hundreds of ships to be stranded in the waterway and some more diverting towards Africa, taking the long route around the Cape of Good Hope.

This raised the fuel costs to hundreds of thousands of dollars. The Suez Canal is a crucial trade route for goods including oil moving from Asia to Europe and vice versa.

The pandemic ridden maritime industry already dreading the long queues and congestion at ports were under immense pressure due to this blockage as delays, goods shortages and consumer costs kept mounting.

Reference: business-standard.com

Source: Maritime Shipping News