Companies that have containers on the Ever Given could have to help pay the up to $1 billion Egyptian authorities are demanding before the ship leaves the Suez Canal

ever given suez canal
The Ever Given container ship in the Suez Canal on March 29, 2021.

  • The Suez Canal Authority said the Ever Given can’t leave until $1 billion in damages is paid.
  • The $1 billion would likely include paying for the tugboats and dredging ships that freed the ship.
  • The owner of the Ever Given declared “General Average,” so insurance could pay some of the damages.
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Though three weeks have passed since the Ever Given first became stuck in the Suez Canal, the massive container ship is still anchored after Egyptian authorities announced $1 billion must be paid before it can leave.

“The vessel will remain here until investigations are complete and compensation is paid,” the head of the Suez Canal Authority, Lt. Gen. Osama Rabie, told a local news station.

But Rabie hasn’t publicly explained where the $1 billion estimate came from nor did he provide a breakdown of expenses from the incident.

An estimate of the damages that the $1 billion could include paying for:

  • Transit fees – Refinitiv, a London-based financial firm, estimated that Egypt lost $95 million in transit fees while the Ever Given blocked the Suez
  • Two dredger ships
  • 11 tug boats of varying size
  • Wages of 800 Egyptian workers that operated around the clock to free the ship
  • Damage to the canal
  • Other miscellaneous equipment used to free the ship, such as excavators

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

Ever Given, Suez Canal
Container ship Ever Given stuck in the Suez Canal, Egypt on March 27, 2021.

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.

If a company has cargo aboard the Ever Given without insurance and cannot pay the deposit, there is a possibility that the freight could be discarded, according to a release from the International Federation of Freight Forwarders Associations.

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