The battle for the Ever Given: ‘If the ship had sunk, we would have gotten money by now’

The Ever Given, refloated at the end of March, in April in one of the Bitter Lakes near the Suez Canal.Image Tom Williams / AFP

In a dark container in the middle of the Egyptian Bittermeer are 71,145 Dutch school diaries. It is the order from publishing house Backtobasix from Amersfoort, which wanted to put the calendars in stores in April. Instead, owner Evelijn Leemreis has to have new calendars printed for her customers. Partly in China and partly in Europe. “Which is a lot more expensive than usual.” Waiting is not an option, because the calendars cannot be sold after the summer. ‘We want to limit the damage as much as possible.’

When the Ever Given was cut across from the Suez Canal by a sandstorm on March 23, the ship caused the most expensive traffic jam ever. For days, the world watched with excitement as the 400-meter-long container ship blocked one of the most important arteries of the world economy. It was the Dutch dredger Boskalis who managed to get the ship afloat after six days.

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At that time, the atmosphere at Backtobasix was still giggly. ‘We thought: well, a few days delay,’ says founder Leemreis. The flag was released when the ship was released again and the more than three hundred waiting container ships could continue their way through a 150-year-old canal. “Everyone thought that everything was on its way back to the Netherlands.”

Evelijn Leemreis: 'We thought: well, a few days delay.'  Image Photo Twitter

Evelijn Leemreis: ‘We thought: well, a few days delay.’Image Photo Twitter

That turned out not to be the case for the 18,300 containers on Ever Given. Where other ships continued their way, the 400-meter long container ship is still moored more than a month later. The 25 crew members on board also have nowhere to go. Before they can set course for the port of Rotterdam, the Suez Canal Authority (SCA) first wants $ 916 million in compensation from the Japanese owner Shoei Kisen Kaisha. Costs for repairing the canal, lost income and reputation damage.

The legal battle for compensation is in full swing. The Ever Given insurer calls the claim absurdly high, but attempts to settle have failed so far. A request from the owner to release the ship during the negotiations was rejected by an Egyptian judge on Tuesday. SCA chairman Osama Rabie said on Egyptian television that the Ever Given is not allowed to leave until the investigation is complete and the owner has paid compensation.

‘A strange move by the SCA’, says harbor economist Bart Kuipers of the Center for Urban, Port and Transport, which is affiliated with Rotterdam Erasmus University. The Ever Given’s claim and hostage situation are premature. There is still so much unclear about how the ship got stuck and who is to blame. ‘ The unprecedented amount that the authority is demanding, according to Kuipers, shows that the channel manager does not keep the interests of the cargo owners in mind and that attitude is causing reputation damage.

Jean-Paul van Munster agrees with this. The CEO of the forwarding companies Trans Ocean Pacific (TOP) and Famous Pacific Shipping (FPS) himself has more than a hundred containers on Ever Given with cargo from importers, exporters and forwarders from all over the world. ‘All our clients are still waiting for that freight. It’s a hopeless situation. ‘

Moreover, the SCA has not lost that much income, thinks Van Munster. Ships passing through the Suez Canal normally pay tolls to the regulator. Due to the blockade of six days, no money came in for a while. ‘Only a small number of the ships have passed by. The rest have still paid toll. ‘

In the past, insurers already provided a guarantee for payment in similar cases, so that the ship can continue sailing. But that appears to be difficult now that there is disagreement about the amount of the damage.

According to lawyer Jolien Kruit of the Van Traa office that specializes in international trade, this legal battle is not over for the time being. The owner of the Ever Given has declared a so-called ‘general average’. “An old maritime custom, which is now standard included in transport agreements,” said the maritime and inland shipping lawyer. In general average, the costs incurred in the interest of the ship are divided between the owners of the ship and the owners of the cargo bunkers, and the freight on that ship. ‘After all, they also have an interest in such a rescue operation.’

In practice, it means that owner Shoei Kisen Kaisha wants all companies with items on the ship to help pay for the damage. A specialist company must divide the damage costs based on the value of each freight. ‘A company with a container full of expensive medicines will, in principle, pay more than the owner of ten containers with packages from AliExpress,’ says Kruit.

It is still unknown how high the percentage that companies would have to pay for their freight. ‘In any case, the companies do not have to contribute more than the value of their cargo. ‘Otherwise, the owners don’t think about it.’

Extra delay
For Gideon Overwater, owner of PVO International, the legal battle over Ever Given is causing ‘an annoying delay’. His company has 34 containers full of solar panels on the ship. They have already been sold. ‘We now have to come up with alternatives to those orders. Moreover, the technology of our products is aging. ‘

The main goal now is that the cargo on the Ever Given is released as soon as possible, says Overwater. But for PVO’s solar panels to be shipped to the port of Rotterdam, the owners and insurers of the thousands of containers on the ship must provide an average-damage guarantee. That guarantees the owner of the Ever Given that everyone will pay for his or her share of the damage, says Overwater. “Only 10 percent of cargo owners had given such a guarantee at the end of April.”

Jean-Paul van Munster of TOP and FPS is also concerned about the handling. ‘We are insured for general average, but that does not apply to all clients we work with.’ Moreover, not every cargo owner will want the freight back, the CEO thinks. “If you have a container with seasonal items that you have to throw away, you’re not going to pay tens of thousands of dollars to get your freight back.”

The company that runs Van Munster also ships groupage containers, which contain items from several clients. These shared containers in particular now cost him a lot of extra time and manpower. ‘It is a big job to find out who has to pay what.’ The CEO is also afraid that he will be saddled with extra costs. ‘If some of the clients pay properly and the other half refuses, you cannot leave the shared container on the ship. We will then pay for the other damage costs to get the container back. ‘

Reputational damage
The jamming of the Ever Given – and its long aftermath – has made importers rethink the risks posed by the Suez Canal. ‘This delay is really bad for the image’, thinks economist Bart Kuipers.

PVO International Director Overwater can confirm this. “Wait a minute, I thought, there are certain risks associated with transporting cargo through a country like Egypt,” says the solar panel trader. “You know there is always a chance of damage, but you don’t expect such an outrageous claim for reputation damage and lost income.”

Attorney Kruit does not expect cargo owners such as Overwater to contribute to the full claim of more than 900 million dollars. ‘Reputational damage, for example, does not fall under the general average,’ she says. ‘Which probably means that the owner will probably not be able to pass on the full claim.’ In addition, Kruit does not rule out suitable options for a lower amount.

Whether or not 900 million dollars in damage, dealing with the general average will take a lot of time. ‘In a major ship fire it can easily take six or seven years,’ says Kruit. ‘It will probably take a long time with a huge container ship like the Ever Given.’

Meanwhile, the damage to companies with perishable products continues to increase. ‘The contracts with the shipping company do not specify a delivery date,’ says owner Leemreis of Backtobasix. ‘Only that they sail the things from Shanghai to Rotterdam. So recovering damage for late delivery will be difficult. ‘ Although she will try.

Leemreis is less concerned about the general average damage. “It’s paid for by insurance.” The stock, which Leemreis can largely write off, is not covered. ‘Now there are a few tons of useless agendas on the ship and you get nothing at all,’ she says. “The sour is: if the Ever Given had sunk, we would have been compensated for everything.”

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