Breaking News: Suez Canal blocked by a mega-sized container vessel [Cleared]

Maybe by the general public, but there are still massive financial consequences to be settled:

Egypt wants over $1 billion in compensation after a cargo ship blocked the Suez Canal for nearly a week, a top canal official has said.

Lt. Gen. Osama Rabei, head of the Suez Canal Authority on Thursday warned the ship and its cargo will not be allowed leave Egypt if the issue of damages goes to court.

He said in a phone interview with a pro-government TV talk show that the amount takes into account the salvage operation, costs of stalled traffic, and lost transit fees for the week that the Ever Given had blocked the Suez Canal.

“lost transit fees”? The only lost transit fees are for ships who went around the southern coast of Africa instead–a very small number.

And there will be claims by all the ships which had to wait.

E

I want a pony.

Here’s a clue, Egypt - when you are ransoming an object worth $150M odd, you aren’t going to be paid a $1B ransom. And it is straight up blackmail - there is no way on earth the incident cost Egypt a tenth of that, in my estimation. No doubt they lost some transit fees - chickenfeed. They probably paid for a few tugs and excavators and a dredger for a few days - chickenfeed.

I suspect this is just a Big Man puffing his chest out and that the vessel’s hull and liability insurers will pay out a relatively small amount to allow Egypt to save face and that will be it. There is some danger that somewhere like Egypt - where the rule of law may be dodgy - may well allow the government to extort some money by - in effect - holding the crew and cargo and ship hostage. But at a billion the owners would be better off just walking away.

Not only that but most of the salvage assets will have been provided by the salvors - who would have been appointed by the shipowner’s hull insurer, not Egypt. And even if Egypt did pay for the salvage, this was a quick cheap salvage. Some of the most expensive, long winded salvages ever, going for years, have cost only a few hundred million. A few tugs, a dredger and some excavators? For a week or so? Gimme a break.

The basis for this is probably dubious at best.

If they do that, Egypt may never let any of their ships transit the Suez again.

Nah, these things are a game of bluff. The Egyptians would know their [puts pinky to corner of mouth] one BILLION dollar claim is sheer blackmail and a try on. They aren’t going to kill the golden goose by missing out on canal fee revenue from a major ship operator for that.

Also, who is “they” in your post? Evergreen? Not their ship. The owners of this ship probably don’t own anything other than this ship.

How much does a cargo ship earn for its owner for every day (or week, or trip) that it’s in operation? I’m sure the ship owners try to keep their ships operating, and earning money, as often as possible.

The blockage at the canal has been cleared, the ships that were stacked up to use the canal have all gone through (except for some that chose to divert), and so the direct costs and lost revenue by the canal authority is probably not too great. But suppose I’m a ship owner. I was counting on my ship hauling cargo for 52 weeks this year. Because of the canal closure, and the ship sitting idle, I’m only getting 51 weeks worth of use out of it. That might be one less trip. Can I sue the canal authority for the revenue I lost waiting for them to reopen? Perhaps their one-billion-dollar claim against Evergreen is for more than just the direct costs to reopen the canal, but includes their liability to everyone else who lost money during the closure.

Firstly let’s do some math. The vessel was aground for 9 days. Wikipedia says:

> Over 300 vessels at both ends of the canal were obstructed by Ever Given , including five other container ships of similar size. These included 41 bulk carriers and 24 crude oil tankers

The Canal Authority says the backlog was cleared within 12 days. Obviously some ships would have only arrived later and some would have got through earlier, but let’s just assume 12 days for 300 ships. Let’s assume the tankers were all dirty suezmax tankers and all the bulkers similarly large at about $50k and $20k per day respectively, and actually let’s just use a blended rate of say $30k which is far too high but anyway. That’s $108M, and an insane exaggeration. Never mind $1B

Secondly, the people losing money on those ships are primarily time charterers who were paying by the day - see above. But whoever. It is highly doubtful that either the owners of the Ever Given or the Canal Authority owed them any duty of care. I very much doubt a canal authority has a legally enforceable obligation to keep its canal open. And good luck trying to pursue such a claim in Egypt. And it hasn’t been proven any particular party was at fault yet anyway.

Look, I do a lot of work in relation to maritime infrastructure that gets blocked one way or another every now and again. And when it happens, there is a lot of hyperventilating about the trillions of dollars being lost every microsecond (OMG everybody panic!). And the claims for pure economic loss never eventuate. Never. Not once in 30 years of practice. Why? Most of those who have arguably lost something are not owed a duty of care. Or have no way to enforce their claim anyway. Or work a bit faster later and make up the alleged lost productivity etc. Or used the downtime for maintenance they would have had to do anyway. And so on and on.

This was a small incident. A big photogenic ship got minorly stuck in a canal on soft sand for a short period of time and was refloated easily with no damage.

I thought the Ever Given was only stuck for SIX days?

You are quite right. I read that, but somehow managed to type “9”. Anyway, doesn’t alter the calculation.

And re-reading I should clarify that the backlog was cleared within 12 days of the grounding, not 12 days of the refloat.

OK, thanks. Nice to know it was just a typo and I hadn’t lost a few days somewhere.

I appreciate you running the numbers and sharing your expertise. I thought it still wouldn’t reach one-billion, but I was wondering if there were other damages that the canal authority might be on the hook for beyond just the direct costs of the refloating operation.

I’m surprised that some of the ships only bring in $20,000 per day. At that price, if I ever win the lottery I’d be tempted to rent one for a week or two and head for the Caribbean.

The reason they bring $20,000 day is that they are huge simple slow steel boxes with an engine, propeller and rudder at one end, and some basic accommodation stuck on top. They are not designed for fun. You could get something far, far more enjoyable for that sort of money.

Rates if you interested: Simpson Spence Young | Bulk Carrier Time Charter Rates

Yeah, but wouldn’t you want to see the looks on everyone’s faces when you show up at the yacht club in that sucker. Some tech billionaire comes out on the deck of his yacht to catch some sun and his whole boat is in your shadow. Put a flag on deck near the bow and then go on top of the bridge with a 7-iron and practice your iron shots. The possibilities are endless.

And besides all that, I’m one of those people who would probably have a better time exploring a cargo ship and looking at all the machinery than sitting on the deck of yacht doing nothing.

The minimum depth of water, and sea-room, required for a panamax bulker are kinda limiting.

Don’t care. I’m inviting people over for a cookout and the most epic paintball battle, EVER!

Oops. Sorry. Stuck in the mud here. Sucks that you can’t get your yachts out of the marina doesn’t it? Why not come up for a drink?

[@Robot_Arm and friends comes on board armed to the teeth with paintball guns]

Ship’s Master - “Well, we won’t be needing these then!”

[reaches for the vessel’s SMS* manuals and throws overboard]

*Safety managment System

Jerri O’Brien, the last original Liberty ship and nowhere near Panamax in size, would have dinner dance cruises in her cargo hold complete with period music. You could probably have kart races in your… yacht.

This former Great Lakes ore boat is now a museum in downtown Cleveland OH. Well worth a visit post-COVID.

One point on the tour is in an interior space a couple decks below the pilot house at the forward end of the forward ore hold. They’ve cut a large opening (10’x20’?) in the bulkhead so you can see into the hold. And they’ve installed dim lighting going back the 150ish feet to the aft end of that hold.

It’s a downright spooky thing staring into that giant steel box knowing about half the space is below the exterior waterline. Not sure I could withstand a banquet in there even if they did crank up the lighting.

And that’s a small hold on a small vessel by 2020s ocean-going standards.

Yeah, a couple years ago I visited the USS Iowa and took the expensive tour. At one point we were on Broadway, a centerline passage that runs almost the length of the ship. At one point the docent pointed to a brass plaque on the bulkhead and said when the ship was at standard load* it denoted the waterline. Needless to say, all four engine and boiler rooms were well below that and I had to wonder how it would feel to be a snipe knowing you were going to be shot at and if things went sideways you’d have to be getting up that high to not drown if the ship was at the normal flotation point – which it wouldn’t be.

*The ship was far lighter than standard load having no fuel or ammunition to speak of on board.

You don’t even have to win a lottery. I got to cruise the Great Lakes, St Lawrence and Gulf of St. Lawrence by signing onto a freighter (Algoway) as night cook. Very relaxing, nice scenery, interesting quick little visits ashore during loading and unloading. Not luxury, but hey, they pay you go on what amounts to a cruise with a bit of occupational therapy (peeling potatoes and frying baloney).