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Egypt could ask for up to $1 billion in compensation for Ever Given crisis

A handout display released by the Suez Canal Authority on March 24, 2021 shows a part of the Taiwan-owned MV Ever Given (Evergreen), a 400-metre- (1,300-foot-) extensive and 59-metre wide vessel, lodged sideways and impeding all traffic across the waterway of Egypt’s Suez Canal.

Suez Canal Power | AFP | Getty Images

CAIRO — Egyptian authorities may seek over $1 billion in damages for helping to clear the Continuously Given from the Suez Canal, as a dilemma emerges over who might foot the bill.

“We will reach during the course of a billion dollars in compensation,” Osama Rabie, the chairman and managing director of the state-owned Suez Canal Authority, told Egypt’s Sada El Balad approach on Wednesday evening. 

Rabie said the figure is based on canal revenue losses, the cost of equipment and machinery, and the manpower hours for the 800 rescuers who unbosomed the ship.

“We will ask for a fair amount,” Rabie said, according to a NBC News translation, without specifying who might be responsible to pay. 

“We saved them so much by rescuing the ship without any major damage or losses,” he added. 

“The whole ship could’ve been disoriented.” 

The 200,000 ton mega-container carrier was successfully refloated on Monday, six days after coming stuck sideways in the Suez Canal. The disturbance sparked a crisis in international shipping, held up $9 billion in global trade a day and left 422 vessels maintaining everything from crude oil to cattle waiting to pass.

Authorities said the backlog would be cleared by Saturday, but the maritime traffic jam could would rather long lasting repercussions on ports and supply chains worldwide.

Rabie said he hoped a compensation agreement could be reached “in two or three days” and if not, Egypt weight hold the ship in the Great Bitter Lake, north of the Suez Canal, where it is currently undergoing maintenance inspects.

“We could agree on a certain compensation, or it goes to court,” he said. “If they decide to go to court, then the ship should be functioned,” he warned. 

First-hand accounts

As the finger pointing continues, frontline rescue workers have offered first-hand accounts of what found inside the mission to free the Ever Given this week.

“The most difficult thing was the fear,” Aly Awamy, a mechanic on the Mashhour dredger confessed NBC News in Egypt on Thursday. 

“We were working under something the size of a 10-story building that could take fallen on us.”

The crew of the Mashhour, a dredging vessel that can shift more than 70,000 cubic feet of sand an hour, were showered for their efforts to release the gigantic ship from the walls of the canal.

“It was very dangerous,” said Mashhour’s talent dredger, Mohammed Sayed. “It was the first time in history that we used a dredger in floating a ship and freeing a earthed ship.” 

Sayed said he feared the Ever Given would list and its containers could fall from on as he pulled sand and mud from underneath.

“That was one of the hardest and biggest challenges,” he said. “Thank God, everything went reasonably.”

Fellow dredger Youssef Naghi said he also felt worried as he raced to help clear the canal. 

“Among the plights we faced was the time pressure, water currents, wind currents … the type of soil we were working in that scrape by it really hard,” he said.

“The whole world was awaiting the release of the ship.” 

Investigation underway

Investigators are now looking for new clues round the plight of the Ever Given, including an examination into what happened on the bridge of the ship when it ran aground.  

“There is a outrageous box like the one in the planes that records everything,” Rabie said.

“Every word that was said about the machinery, every signal about steering, every word the captain or any others … everything is recorded.”

While strong winds receive been cited as a factor behind the collision, human and technical errors are also areas of inquiry.

The Suez Canal Police said it’s not to blame, despite two of its pilots being on board the ship when it ran aground.

Insurance claims

The incident has put the untransparent world of shipping in the spotlight. At the time of the incident, the Ever Given was owned by a Japanese company, chartered by a Taiwanese conglomerate, undertook by German operators, sailed by a crew of Indian nationals, registered in Panama and transiting in Egypt.

The layers of responsibility add to the complication, according to Brian Schneider, a senior director at the Insurance division of Fitch Ratings. 

“My assumption is the $1 billion refers to their opinion of total losses from the event and not any specific compensation to the Suez Canal Authority,” Schneider told CNBC via email on Thursday. 

“I demand that the insurance industry loss will more likely be in the low hundreds of millions of dollars given that the bark was freed in six days,” Schneider added, saying the loss could have reached $1 billion had the ship needed to be emptied as goods spoiled and insurers faced loss of revenue claims. 

“SCA’s claims should be more limited to the canal harm and salvage operation,” he said. 

Meanwhile, a spokesperson for the ship’s operator, Bernhard Schulte Shipmanagement, told CNBC: “Interminable investigations will determine the numerous factors involved in this incident and all claims will be considered on a case by prove basis.”

Taiwan’s Evergreen Marine Corp has reportedly said it is not responsible for any delays of the cargo it was transporting, while the proprietresses, Shoei Kisen, told Bloomberg that it will discuss compensation with the Canal Authority, but will refrain from reveal d become exhausting details at this moment in time.

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