Insurers in deep water after Suez blockage delays global shipments

The owner and insurers of the Ever Given, one of the world's largest container ships that blocked the Suez Canal for six days, face potential claims in the billions of dollars.

   
The 400 metre, quarter of a million tonne ship ran aground at the southern end of the Suez Canal in Egypt on Tuesday 23 March, after losing the ability to steer amid high winds and a dust storm. 
 
The Panama-flagged Ever Given was travelling from China to Rotterdam in the Netherlands and then Felixstowe in the UK. The containers on board carried huge variety of items and the insured value of the cargo is believed to amount to hundreds of millions of dollars.
 
The Suez Canal is an important shipping route that links the Mediterranean with the Red Sea and acts as a daily transit point for 30% of global container shipping.
 
Without this conduit, ships have to take the African Cape route to travel between Asia and Europe, which takes around 10 days longer and adds 6,000 miles to the journey.
 
Authorities worked frantically to free the ship, eventually refloating her on 29 March – six days after she ran aground.
 
The freeing of the Ever Given raised hopes that maritime traffic could resume and limit the economic fallout.
 
However, by the time she was refloated, hundreds of ships were waiting to pass through the canal, with officials predicting it would take at least three days to clear the queues.
 
A wave of claims
 
The temporary hold-up of the Ever Given is potentially the world's biggest ever container ship disaster. 
 
The closure of the canal is thought to have blocked $10 billion of oil and goods that sail through the passage on a typical day.
 
Liability for costs incurred as a result of these delays looks likely to be pushed towards the Ever Given's owners – the Japanese firm Shoei Kisen KK, and its insurers.
 
The cargo owners of ships stuck in the logjam will be pressing for claims for missed deliveries and loss of perishable goods, plus additional fuel, crew, alternative transport and other costs.
 
Charterers of all the ships delayed or re-routed will want to pass along costs in claims to the insurer of the Ever Given. 
 
Supply chain issues
 
Shipping schedules have quite limited flexibility and many ports are already facing weeks of delay, with the congestion and traffic in shipping routes causing oil prices to surge.
 
There is also potentially damage to the canal from the ship's grounding and efforts to free it, raising the possibility of costly remedial work and further delays to ships.
 
How can Fieldfisher assist?
 
Fieldfisher can support clients facing issues as a result of this incident.
 
With specialist expertise across wet and dry commodities, contentious and non-contentious, transactional and shipping finance work, our highly experienced legal team provide detailed, commercial advice.
 
For more information on how we can help, please visit Fieldfisher's Transport and Infrastructure – Maritime page or contact dispute resolution partners Simon Sloane and Andrew Sanderson.