Work resumes to free Ever Given in Suez Canal

Work resumed this morning to free an ultra large container ship that was grounded in the Suez Canal Tuesday.

Some traffic has been able to move but dozens of vessels, including other large container ships and tankers remain backed up as MS Ever Given blocks the central shipping route between Europe and Asia.

A second, separate incident involving a collision between a bulker and Russian military tanker was reported in the Egyptian waterway on the same day.

About 10% of global trade passes through the Suez Canal, which connects the Med to the Red Sea and provides the shortest sea link between Asia and Europe. Ships save 9,000km or 10 days by using the Suez Canal.

Nearly 19,000 ships passed through the canal in 2020, according to the Suez Canal Authority, an average of over 51 ships per day. The Suez Canal has an excellent safety record overall with shipping incidents extremely rare. There have been 75 reported shipping incidents in total in the canal over the past decade according to the Allianz Global Corporate & Specialty Safety & Shipping Review 2020. More than a third involved container ships.

Groundings (such as the Ever Green incident) are the most common cause of shipping incidents in the canal – 25 in the past 10 years or 1 in 3 of all shipping incidents in the canal. Together, grounding, collision and contact incidents account for half of all shipping incidents in the Suez Canal over the past 10 years (38 in total).

Container-carrying capacity of ships has increased by around 1,500% since over the past 50 years and has almost doubled over the past decade (see chart).

Allianz estimates the insured values of these vessels (hull only) to be between US$70m for an older vessel (say 2012) to US$150m for a new one.

David Smith, head of hull and marine liabilities at McGill and Partners. says the blocking of the Suez is an incredibly damaging situation.

“The disruption will come with a hefty price tag, a figure of US$100m has been mentioned by some in the industry. However, the final bill - which will be made up of compensation for delays, loss of revenue for the Canal Authority, potential damage to cargo and the cost of refloating the ship, is likely to be even more expensive.

“For some time now the salvage industry has been warning that container ships are simply getting too big for situations like this to be resolved efficiently and economically. This incident may force shipbuilders, owners and cargo operators to sit up and listen.”

Image, courtesy of Allianz, illustrates 50 years of container ship growth.

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