The Suez Canal has reopened, but the Ever Given is not free to leave

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Egypt will not release the massive container ship that blocked the Suez Canal for nearly a week in March until its owners agree to pay up to $1 billion in compensation, according to local authorities, as they investigate how the Ever Given got stuck and shut down one of the world’s most important waterways.

“The ship will remain here until investigations are completed and compensation is paid,” Osama Rabie, chairman of the Suez Canal Authority, told Egyptian state television on Thursday.

“We expect a quick settlement,” he said. “The moment they accept the compensation, the ship will be allowed to move.”

Mr. Rabie did not say Thursday what amount Egyptian authorities were asking for as compensation. But he said last week that Egypt would demand $1 billion for the cost of the operation to free the ship, the loss of transit fees – a major source of foreign exchange for Egypt – and other costs stemming from the canal blockade, which caused a traffic jam of more than 400 ships on both sides of the canal.

The Suez Canal Authority has not said how Mr. Rabie arrived at that figure, nor how much it spent to free the vessel. The blockade cost the Egyptian state $95 million in lost transit fees, according to an assessment by Refinitiv, a London-based financial analysis firm. But Egyptian authorities also said they would recoup the lost revenue when they resumed traffic through the canal.

Accidents involving large container ships can lead to property claims of more than $1 billion, according to credit rating agency Fitch Ratings. Insurers covering Ever Given will face claims for losses related to perishable goods and supply chain disruptions, as well as the Suez Canal Authority for lost revenue, according to Fitch.

Mr. Rabie has said he would not rule out a lawsuit, but would prefer to settle the compensation issue out of court.

Shoei Kisen Kaisha Ltd, the Japanese owner of the Ever Given, said it had not officially heard from Egyptian authorities that they would not let the ship go unless the company accepted compensation, according to company spokesman Ryu Murakoshi.

“It is true that we are negotiating with them,” he said, although he declined to say the amount of compensation being sought from the company. He said the company was cooperating with the Suez Canal Authority in the investigation.

The 1,300-foot Ever Given garnered worldwide attention when it ran aground in the Suez Canal on March 23, disrupting world trade. Engineers and sailors worked tirelessly for six days to dislodge it, and freed it on March 29 with the help of an unusually high spring tide.

The ship, its cargo and a crew of 25 Indian sailors remain anchored in Egypt’s Great Bitter Lake, a body of water that separates two sections of the canal.

Mr. Rabie said Thursday that investigators are mining data from the ship’s voyage data recorder for more clues about how the vessel ended up lodged on the canal bank.

People involved in the investigation initially said it was focusing on a sandstorm that was taking place when the ship ran aground and a two-minute gust of wind that likely diverted the ship’s course.

Meanwhile, Shoei Kisen is stepping up its efforts to reduce exposure to potential costs related to the vessel’s grounding. The two Shoei Kisen units that directly own the vessel filed a lawsuit April 1 in London’s High Court to limit their liability, according to legal records seen by The Wall Street Journal.

The suit names as defendants the ship’s charterer Evergreen Marine Corp. and all other persons who could claim damages in the grounding of the Ever Given along the Suez Canal, the records say. No date has been set for the first hearing.

Mr. Murakoshi, a spokesman for Shoei Kisen, confirmed that the purpose of the filing was to seek a limitation of liability. He said the filing was not a lawsuit against Evergreen or anyone else and characterized it as part of the normal process of an insurance claim.

Shoei Kisen stated on April 1 that shippers with cargo on the vessel would have to pay into a fund to cover recovery costs or damages before they could claim their cargo, according to the company and documents sent to customers and seen by The Wall Street Journal.

Shoei Kisen has hired adjuster Richard Hogg Lindley to handle the matter, the documents say. The insurance broker did not respond to a request for comment.

Unions representing the Ever Given’s crew have expressed concern about the prospect of protracted litigation that could see the sailors stranded in Egypt.

“The prospect of them being stranded is of great concern to us,” said Stephen Cotton, general secretary of the International Transport Workers’ Federation in London. Mr. Cotton also said the crew appeared to be well treated.

Source The Wall Street Journal

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