Ever Given saga raises key questions
“Greedy for returns and taking little cognizance of the risks involved in operating large passenger ships, the cruise sector will probably only learn the consequences of the increase in size of these vessels when a major disaster occurs ...
THE subject of an interesting documentary on TV, the mega-containership Ever Given – called a “boat” by the TV folks – continues to attract attention.
“It was going to happen, sooner or later,” commented one of the TV participants, a prominent member of the British maritime community and a seasoned shipmaster, referring to the containership with tens of thousands of containers aboard, “but no one expected it to happen in the Suez Canal”.
Another participant, a maritime journalist, reminded the audience that shipping is one of those unseen industries “out there on the high seas”, yet so important in the worldwide transport of all manner of goods from machinery, car parts, textiles, chemicals, oil, food, and more.
She alluded to the fact that accidents bring the industry into sharp focus, as was the case with Ever Given.
She might have added the industry has secluded itself from public interest behind razor wire and Rottweilers, and therefore, unlike the airline industry that is used by the public and constantly in the public’s eye, is shrouded by a degree of mystery – until something goes wrong.
Until this accident, did the general public know that such large containerships exist or that an accident could delay the delivery of her cargo – and that of the other ships whose passages
through the canal were blocked?
Had the shipping industry contemplated the scale of the consequences of such an accident – or the blockage of the canal even by a smaller ship – or an even longer blockage of this vital shipping route?
Congestion in European ports and Singapore is still being experienced following the rush of ships to their destinations after the canal was reopened.
Apart from delays in cargo deliveries that were caused by the blockage, a shortage of empty containers in the Far East is hampering current shipments, particularly to Europe and North America.
Thus in view of this shortage, freight rates have spiked.
Ever Given remains in the Great
Bitter Lake, her voyage frozen by the Egyptian authorities who are claiming a huge payment in reparations before they will release the vessel and her crew.
Many believe the demand involves an unreasonable sum that is far in excess of the canal’s income in a short period.
One observer has labelled it as simple greed.
The ship is operated by Evergreen, a large, reputable Taiwanese company, is owned by a well-known Japanese company, is fully insured by renowned underwriters, and is not part of a flyby-night syndicate.
Ships belonging to both companies transit the canal regularly and, if there was some default on a legitimate and reasonable compensation payment in respect of Ever Given, surely one of those could be attached as would happen in any reasonable legal dispute?
The current demand on the shipowner could return to bite the Egyptians where it hurts most.
She and her crew should be freed immediately.
Indeed, insurers will want her urgent release as some cargo will deteriorate in the increasing heat of the Egyptian desert, and some chemicals may even become unstable, causing a serious fire on board.
Insurance underwriters will have to pay the “ransom” that inevitably will be recouped from the pool of shipowners through higher insurance premiums, especially for larger ships transiting the canal.
Perhaps the shorter Suez route will now become more costly than the Cape route in terms of added costs for the mega-containerships that, because of the enormous insurance risk, have been labelled Suez-Risk-Supra-Max vessels.
As a result, will some ships divert to the Cape permanently, with all the potential economic benefits to local service providers?
Add to this the implications of the recent drone attack on an Iranian tanker in the Arabian Gulf.
Similar attacks can happen – and have happened – to vessels passing through the Gulf of Aden or the southern end of the Red Sea, part of the Suez route.
The Ever Given incident will not be the last to demonstrate the vulnerability of the wider Suez route.
Perhaps this incident will also be yet another wake-up call for the International Maritime Organisation, classification societies and underwriters to cap the sizes of ships.
Tanker owners discovered that, given the risks of pollution and the mega-costs of consequent law suits, insurance premiums on ultra-large tankers had become too high and that, by adjusting oil routes and owners’ modi operandi, smaller tankers can operate almost as successfully.
Few ultra-large tankers are trading now.
Greedy for returns and taking little cognizance of the risks involved in operating large passenger ships, the cruise sector will probably only learn the consequences of the increase in size of these vessels when a major disaster occurs, paling Titanic’s loss or even the loss of Wilhelm Gustloff in January 1945.
Ever Given’s mishap, as well as the enormous and costly fire aboard Maersk Honam in March 2018, confirmed the concerns of many regarding the size and vast capacity of these mega-containerships.
The total loss of one of these vessels will have unfathomable consequences for the insurance industry and for affected cargo owners.