Egypt plans to claim over $1 billion for Suez Canal blockage

 

The Egyptian authorities investigated the “Evergiven”, a large container ship that caused a trade crisis by blocking the Suez Canal, major source of Egypt's income, for six days. As the Suez Canal earns 2% of gross domestic product (GDP) annually (about 6.3 trillion won), it will seek out the cause and hold responsibility for the damage. Egyptian authorities estimate that the losses from this incident will exceed $1 billion.

On the 31st, according to Reuters, an investigation team made up of experts investigated the hull of the Evergiven. "In this investigation, we will consider whether the condition of the Evergiven is suitable for navigation, and whether the captain's judgment and actions are correct," said Saeed Sesha, head of the investigation team.

The Suez Canal Administration (SCA) also conducted an investigation on the crew of the Evergiven. SCA Commissioner Osama Ravi told the Egyptian media, "The Evergiven can't move until the investigation is over," and "I don't know when the investigation will be over."

It is estimated that the damage suffered by the Egyptian authorities will be over $1 billion. “It could be more than this,” said Ravi SCA Commissioner. “Through the investigation, we will calculate the amount of damage, losses by the Egyptian authorities.” Earlier, he said on the 28th of last month that the Egyptian government was losing 14 million dollars a day in the accident.

However, SCA Commissioner Ravi did not disclose whether to charge the cost and compensation to either Shoeisen, a Japanese company owned by Evergiven, or Evergreen, a chartered company, Taiwan. He didn't even mention whether Egypt had already demanded compensation. According to Reuters, Shoeisen said that so far, no claims or lawsuits have been filed in relation to the grounding of the Evergiven.

Insurance companies are also unlikely to avoid losses. Claims for liability insurance for ships and cargo due to traffic delays are expected to fall to the UK P&I Club, the liability insurance company of Evergiven. In addition, the P&I Club is affiliated with Lloyd's Insurance Company in the UK. Bruce Carnegie Brown, chairman of Lloyd, said, "Lloyd may have to pay insurance for about 5-10% of the total number of reinsurance claims."

Meanwhile, with the canal reopening from the 29th of last month, 81 ships a day passed through the canal in both directions on the 31st. The Suez Canal Authority operates 24 hours a day traffic to relieve a week-long vessel congestion.

The Suez Canal, which connects Asia, Africa and Europe, accounts for 12% of the world's trade volume. It is a key point where an average of 51 ships per day pass. Last year, 19,000 ships passed through this canal. It is estimated that the toll loss incurred by the Evergiven aground accident for a week will amount to 150 million dollars.