Egypt released the Ever Given from its anchorage in the Suez Canal on Wednesday after agreeing a compensation deal.
The ship was the object of a protracted legal battle between its owners, Japanese company Shoei Kisen Kaisha, and the Suez Canal Authority (SCA) ever since its seizure on April 13.
The ship, which was carrying nearly 20,000 containers, had been impounded by the SCA after it was unstuck from the banks of the canal, where it had spent six days blocking a crucial international shipping route.
Details of the final deal between the SCA and the ship’s owners have not been made public. However, people close to the negotiations told The Wall Street Journal that the preliminary compensation deal, struck in late June, called for $200 million and a tugboat.
Dustin Eno, a spokesman the UK Club, which insures the Ever Given, declined to provide details of the deal.
According to the WSJ, the ship’s departure from the port of Ismailia – the nearest city to where the ship got stuck – will be broadcast live on Egyptian TV. The passage would be marked with a ceremony, Reuters reported.
As of 11.45 a.m. local time, the ship was headed out of the Bitter Lake, an artificial body of water off the canal where it has been held since its seizure.
The ship’s next port of call is Port Said, at the canal’s northern mouth, where it is to be inspected for its seaworthiness.
After that it cane get into the Mediterranean and try to reach its original intended destination, the port of Rotterdam in the Netherlands. It will also remove its containers at the UK’s port of Felixstowe, the paper reported.
For its second trek through the canal, it will be accompanied by two tugboats and will have two experienced pilots on board, Reuters reported.
In another statement posted on Facebook, the authority states: “The highlighted losses incurred by the S.C authority due to the incident of the grounding crisis of Ever Given that can be seen is the damage to a number of participating marine units and the sinking of one of SCA marine units during the salvage operations, resulting in the death of one of the participants.”
It is unclear who died and how exactly this reported death occurred. There is also no record of a tugboat or marine unit sinking during the operation.
Insider has reached out to the SCA for more information but did not hear back in time for publication.
The Japanese-owned Ever Given container ship made headlines in March after it ran aground in the single-lane stretch during a sandstorm, blocking the Suez Canal for six days and significantly disrupting global trade.
Lawyers acting on behalf of the Japanese company Shoei Kisen Kaisha, which owns the ship, have said the SCA was at fault for Ever Given’s grounding because they allowed it to enter the canal amid poor weather conditions.
A container ship owned by the same company as the Ever Given – the ship that blocked the Suez Canal – is sailing back to Italy this week, nearly two months after its captain died on board and the ship was turned away from multiple ports in Asia.
According to the maritime news site gCaptain, the Ital Libera container ship works the Far East to South Africa Express, delivering shipments between South Africa and ports in China and Taiwan.
It’s owned by Italia Marittima, a subsidiary of the Evergreen Marine Corporation, the company that owns the Ever Given.
The ship brought on a new captain and crew before setting off from Durban, South Africa, on April 1, and within days a number of crew members became sick in what appeared to be a COVID-19 outbreak on board, according to the Maritime Executive.
Captain Angel Capurro, 61, is believed to have died on board on April 13, according to Italy’s ANSA news agency.
Capurro tested negative for the coronavirus before getting on the ship, and traveled to Durban via Doha, Qatar, and Johannesburg, South Africa, according to the Maritime Executive.
When Capurro died a decision was made to divert the ship to the port of Jakarta for a 14-day quarantine, according to gCaptain.
After the quarantine was over, Italian officials wanted to fly the captain’s body back to Italy, but no Asian ports allowed anyone get off the boat, Maritime Executive reports.
The Italian Ministry of Foreign Affairs was said to have been turned down by Malaysia, Singapore, Indonesia, Thailand, Vietnam, South Korea, the Philippines, and South Africa.
For that reason, a decision was made for the ship to sail to Italy to return the captain’s body, according to a June 7 update from the Hapag-Lloyd shipping company, a partner of Evergreen.
Hapag-Lloyd said the ship will return to its Far East service, but dates on when are yet to be determined, according to gCaptain.
As of Thursday, the Ital Libera was sailing in the Red Sea off the coast of Egypt, according to the shipping tracker AIS.
Egyptian authorities said this week they plan on widening and deepening parts of the Suez Canal to avoid a repeat of the Ever Given blunder in March, according to Bloomberg.
In a televised address on Tuesday, the head of the Suez Canal Authority (SCA), Osama Rabie, said an 18.6 mile stretch of the waterway would be widened by about 131 feet (40 meters) and deepened by 32 feet (10 meters) to improve the movement of ships in the area.
The expansion will take around two years, Rabie said.
Egyptian President Abdel-Fattah El-Sisi, who also spoke at the event, stressed he doesn’t want to mobilize “huge” public funding for the project, according to Bloomberg.
Shipping vessels have grown larger by multiples in just a few years, adding to worries among some industry insiders that a single mistake made by a massive ship could cause a global supply chain disruption, as the world saw with the Ever Given.
As ships like the Ever Given have grown over the last few decades, their crews have been shrinking because they’re using more automated processes, said Captain Rahul Khanna, global head of marine risk consulting at Allianz Global Corporate & Specialty, whose team publishes an annual safety review.
“Decades ago, the ships with 3,000 TEU – that’s the number of twenty-foot containers that can fit onboard – were considered the big ones,” said Khanna.
Now, ships like the Ever Given carry maximum loads of more than 20,000 containers. Boat-building technology could in the years and decades ahead produce ever-larger ships, perhaps growing to 50,000 containers or more. If there’s demand for such ships, modern technology could allow for such builds, Khanna said.
Between 2006 and 2020, the largest shipping vessels in the world grew by 155%, according to a January report from the United Nations Conference on Trade and Development. The biggest ships are loading or unloading 125% more at each port they visit.
With bigger boats, there could be more impactful accidents.
“While seemingly efficient, they are too large to fit in some ports, increase dangers in storms, and highly piled containers are falling, causing product and the corresponding financial losses,” said Cheryl Druehl, associate professor of operations management at George Mason University.
Even the Ever Given debacle, which grabbed hold of the worldwide news cycle, could have been worse. If that ship’s hull had broken, say, it would have taken even longer to fix the issue, Khanna said. It’s likely that a crane would have had to have been constructed nearby to remove some or all of its load. Refloating it would have been a more complex task, likely stretching into months.
Surveying the world’s riskiest shipping routes
As the shipping industry gets back to its normal routine, Khanna and other shipping industry insiders walked Insider through their concerns about the next big disaster.
The most obvious answer was that another ship could get stuck in the Suez or Panama canals. The risk of a situation similar to the Ever Given’s crash in one of those waterways was “unlikely but high impact,” said Ambrose Conroy, founder and CEO of Seraph, a consulting and turnaround firm.
The risk was lower at other heavily travelled shipping lanes, including the Singapore Strait, and the Strait of Hormuz, although it has geopolitical risks of its own, said Khanna.
Ports in the future may also have trouble handling larger ships, but that’s an issue that can be fixed with proper planning, Conroy said. Instead, it’s the “black swan events” like the Ever Given that the industry needs to look out for.
One concern is a shipping route that’s becoming more popular. In decades past, a lane through the Arctic would open in summer months, giving ships a more direct path between Europe and Russia.
As the climate crisis has reduced the amount of ice in those northern regions, that passageway is now increasingly beingused in the winter. It’s become so popular that the International Maritime Organization issued a revised Polar Code.
As the Ever Given stalled global shipping in March, Moscow officials pointed to the Northern Sea Route through the Arctic as an alternative.
But Arctic travel comes with its own risks. While it’s unlikely that modern ships, with all their technology, would hit an iceberg, smaller ice floats can still damage hulls, Khanna said. An oil spill in the Arctic would also be devastating to marine life. And rescue crews might have difficulty reaching a stranded ship in such inhospitable waters.
Concerns about long journeys during the pandemic
Shipping industry observers also say the health and wellbeing of ship crews are a growing concern for 2021 and beyond. Shipping can take crews around the world – “It’s easier to list the places I haven’t been,” said Khanna – but many haven’t been able to visit their homes since the pandemic began.
“Crews haven’t been able to go back home on their leave,” he said.
Automation hasn’t helped, said Druehl, the George Mason professor. With more automation, ships have been able to stay away from their home ports longer. And it’s brought up issues like “skeleton crews, leading to more isolation and risk of piracy.”
Decentralizing the manufacturing industry is one possible way to cut risk, said a few industry insiders. Bring manufacturing back in the parts of the world that have become importers, and shipping won’t be as much of a concern, they said. But that’s easier said than done.
“The intricacies of global logistics are meaningless to most, that is until the truck doesn’t show up and the shelves go empty,” said Richard Weissman, director of the Organizational Management Program at Endicott College.
Issues caused by the Ever Given were still trickling through the supply chain in the last few weeks, he said. But most people won’t notice, unless they’re among the few who actively follow supply chains.
He added: “Once freight crosses the threshold of the loading dock and the truck door closes, we tend to forget about it. That’s the one thing that has to change now.”
A training facility in a lake in eastern France, which replicates some of the busiest trading routes in the world, has seen a surge in interest after the colossal container ship, the Ever Given, became wedged in the Suez Canal last month.
The Port Revel facility, located in a lake on the foothills of the Alps in Saint-Pierre-de-Bressieux, is designed to help mariners and ship captains navigate crucial shipping channels.
The replicas of the different waterways, including the Suez Canal, the San Francisco Bay, and Port McArthur in the Gulf of Mexico, are made to be as realistic as possible, built to one twenty-fifth the scale of the real ones.
Trainees at the facility have to learn how to maneuver scale models of massive container ships without getting stuck in narrow channels, facing strong underwater currents, and machine-generated waves while doing so.
Instructors can also simulate steering problems and engine outages to see how the trainees react.
Abdel-Gawad does not work for the SCA, but a subcontractor. He told Insider at the time that he fully expected to receive his overtime pay at some point, but noted that it was slow coming.
Insider has not been able to confirm with Abdul-Gawad’s employer whether he has now received his overtime. Abdul-Gawad declined to comment.
After the Ever Given was grounded on March 23, blocking the Suez Canal entirely, images of Abdul-Gawad’s digger trying to free it became world famous. A watching world found the sight of Abdul-Gawad’s tiny excavator next to the colossal ship appealing material for memes.
But the actual working conditions he described painted a much more serious picture – he and his colleagues could only snatched brief sleep in a nearby hut, and that he feared for his safety.
The ship was freed on March 29 by the combined efforts of Abdul-Gawad’s excavations, multiple tugboats, winches, a specialized dredger – and a supermoon-powered full tide.
The SCA took a victory lap in a statement on the same day, in which its head Lt. Gen. Osama Rabie congratulated SCA workers “who achieved this heroic feat saying that they have done their patriotic duty impeccably,”
But Abdul-Gawad told Insider he felt overlooked in the triumph.
In the Facebook statement, posted April 13, the SCA urged Egyptians “not to pay attention to rumors and anonymous news,” and asked people to rely only on “official sources.”
It added: “We affirm that the employee has obtained all his due salaries/fees from his employer in addition to a bonus in recognition of his service above and beyond.”
The Ever Given remains in the Suez Canal’s Great Bitter Lake, where it has been impounded amid a major legal action launched by the Egyptian government against the ship’s owners.
Rabie said that its investigation into who was at fault for the grounding will be concluded Thursday, the Guardian reported. He denied any culpability on the SCA’s part, and said that “of course” the ship’s owner was at fault, the paper reported.
The ship’s technical managers, Bernhard Schulte Shipmanagement (BSM), said in a statement that it found the SCA’s decision to impound the Ever Given “extremely disappointing,” citing the cooperation it had offered the authority in investigating the cause of the grounding.
In early April, Shoei Kisen Kaisha filed a “general average” claim, which would share any costs between the ship’s insurers and the owners of its cargo.
General average is a principle of maritime law that means risk for damages is shared between the ship’s customers.
Abdulgani Serang, the general secretary-cum-treasurer of the National Union of Seafarers in India, likened Rabie’s $1 billion demand to a ransom and said the crew shouldn’t be held against their will while the ship is anchored and motionless.
“If the SCA has suffered losses, they can sort it out with those involved with the ship, but that cannot haul up seafarers in any manner,” Serang told the Times of India.
Serang told Insider that though they are not allowed to leave the ship, the crew are not imprisoned or on a form of house arrest.
“They are all onboard the ship and continuing with their work as required onboard,” Serang said. “Absolutely no cause to worry about their supplies, including their wages all being taken care of as per the union agreement like before the incident.”
The Ever Given’s newest challenge: insurance
Neither Egypt nor the Suez Canal Authority explained who could be responsible for the full $1 billion demand, but recent filings in London’s High Court suggest that the expenses could be split between the Evergreen, its insurers, and cargo owners on the boat.
The owners of the Ever Given filed a General Average claim in early April against Evergreen Marine Corp, the company leasing the ships. The suit included 15 other defendants who would likely be asked to chip in on the bill.
General average is a principle of maritime law that requires any of the ship’s customers to share the risk and costs involved if the ship faces a tragedy or failure.
“Evergreen Marine received a notice from the lawyer representing EVER GIVEN’s owner on the 1st April which specified that the owner had filed an Admiralty limitation claim at the High Court of Justice in the UK in accordance with the Merchant Shipping Act 1995, in view of the liabilities and compensation that may occur due to the grounding incident,” a spokesperson for Evergreen told Insider.
Declaring General Average would prevent Shoei-Kisen, the owner of the ship, and its insurance from paying the bulk of damages from the shipwreck but could lead to even longer waiting times for people to receive the goods still on the ship.
The British International Freight Association announced in a statement that if a company has containers aboard the ship, they will be asked for “an indemnity or deposit,” but noted that “any standard marine insurance policy” includes General Average losses. If a company did not insure the ship, however, then a cash deposit will be necessary to receive the containers.
The stock price of the Taiwanese transportation company whose ship blocked the Suez Canal has soared ever since the incident that upended global trade began.
Shares of Evergreen Marine Corporation have gained 28% since March 23, the day the Ever Given ship got stuck in the Suez Canal and triggered an epic traffic jam of more than 400 ships.
Evergreen’s stock has been climbing since last summer, but saw a significant spike after the canal blockage. On the day the Ever Given got stuck, Evergreen tumbled 8% and closed at 42.75 New Taiwan dollars (NT$). Since then, it’s rallied to NT$55-the highest price in over a year-bringing Evergreen’s yearly gain to 440%.
It’s not out of the ordinary for ocean freight tanker stocks to experience volatility, as they’re heavily tied to shipping rates which tend to swing around, said Adam Scheiner, an analyst at UBS Global Wealth Management.
But shipping rates have been steadily rising as the world emerges from the pandemic, and the canal blockage only exacerbated port congestion and demand for shipping.
“The blockage in the Suez Canal just poured gasoline on this demand and price fire,” Scheiner told Insider.
Peter McNally, Third Bridge’s global sector lead for industrials, materials, and energy, told Insider that container shipping rates are up four times since the start of last year.
“This was the state of play before the Ever Given snarled global shipping traffic,” he explained.
A shortage of containers and difficulties dealing with the logistics of getting vessels in use back to Asia drove shipping rates higher throughout the year, McNally said. Additionally, the pandemic slowed air traffic and more companies turned to marine shipping to transport freight, he said.
High shipping rates will bode well for freight transportation companies, but Evergreen may be coming under pressure soon for its role in the global trade chaos.