The ship that brought global trade to its knees is still stuck in the Suez Canal and now finds itself at the centre of an almighty international row, reports Wired.
Inside the Ever Given
Day after day, the 24-person crew duly go about their tasks. Routine maintenance is performed. Fire drills are carried out. Minimum safe manning standards are kept. Everything is ready and raring to go. But this ship hasn’t moved for months – and most of its inhabitants haven’t set foot on land since they set sail more than 100 days ago. All they can do is wait.
Outside, the Egyptian sun slowly simmers cargo headed for the UK and Germany, as well as trains destined for central and eastern Europe – wiring, lawnmowers and gazebos which will one day be bound for assembly lines, supermarket shelves and homes across the continent. Alongside surgical gowns, wheelchair parts and sun loungers, there’s also plenty of food: tea leaves, lemons and tofu all rot away in the heat. None of it can be offloaded.
This is the Ever Given, the same ship that launched a thousand memes when it got stuck across the Suez Canal on March 23 and held up nearly $60 billion of trade. It took a week of tugs, dredging and a crack team of salvage experts to free the 220,000-tonne megaship. As the Ever Given set sail once more, horns blared out in triumph. Yet its next unscheduled stopover lay just 30 kilometres away in Great Bitter Lake where it was towed for a seemingly routine inspection. It’s been anchored there ever since.
The vessel is stuck once more – this time by an almighty international legal row. By mid-April, it had been impounded, with the Suez Canal Authority, or SCA, slapping a claim against its owners in an Egyptian court. The salvage fee? Nearly $1bn. “I’ve seen cases like this but on a much smaller scale,” explains maritime solicitor Jai Sharma of law firm Clyde & Co, which represents the insurers of more than $100 million worth of cargo on board the Ever Given. “What sets this apart is the amount of money being requested – it’s far, far beyond what anyone in our industry would expect.”
With negotiations at an impasse, the Ever Given’s Indian crew remain stuck on board a ship that cannot sail. And there’s only so much work to do for a ship that’s going nowhere. The Ever Given does at least have Wi-Fi to help pass the time and stave off cabin fever. There’s also a toll-free counselling helpline for the crew and their families.
“Being in anchorage for so long definitely dampens the spirits,” says Abdulgani Serang, who heads the National Union of Seafarers of India, which has visited the crew on board. “But, in this case, it comes with the baggage of the Suez Canal incident, which adds to their trauma.”
Hopes of settling the case soon
The Ever Given was due to dock at Rotterdam on April 3, where much of its estimated $700m worth of cargo was to be offloaded and forwarded on to the rest of Europe. In the time that it’s idled, more than 4,000 vessels have passed it by on Great Bitter Lake.
The delay has been so long that seven crew members have returned home following the end of their contracts. But the SCA’s requirement that the ship is operational means that six replacement seafarers have been drafted in from India – notwithstanding the Delta variant of Covid-19 that has torn through the country.
That means that alongside negative PCR tests, new crew members had to complete a week-long quarantine in individual cabins – before assuming full duties aboard a ship which hasn’t sailed in months.
Ian Beveridge, CEO at Bernhard Schulte Shipmanagement, Ever Given’s technical manager, says that the crew remain safe and well. “We hope to see the case settled soon so that they can be released with their ship at the earliest opportunity.” The SCA did not respond to multiple requests for comment.
Muddying the legal waters
Muddying the legal waters is the sheer number of international players involved – a standard for the shipping industry. Although managed by a German company, the Ever Given’s Japanese owners, Shoei Kisen Kaisha, have leased the ship to Taiwanese firm Evergreen.
Insured by a British broker, run by an Indian crew, it flies the flag of tax haven Panama. The multi-jurisdictional mishmash makes the ship arguably more vulnerable to the demands of the state-owned SCA, which pumps upwards of $5bn into the Egyptian economy every year through transit fees.
Although a local authority has the right to arrest a ship and cargo following a salvage operation, security is often paid – meaning the vessel is free to go with the final bill sorted later. While haggling between the SCA and the shipowner has halved the asking price to $550m– covering lost revenues, salvage costs and a salvage bonus, plus reputational damage – the full settlement would still make it the most expensive of its kind in maritime history.
“People aren’t willing to effectively provide a blank cheque for the SCA,” Sharma says. He cites the case of Maersk Honam, a container ship which caught fire in the Arabian Sea in 2018. “That was a three-month salvage operation involving major danger. Security for that was $105m.”
It’s widely agreed that a sandstorm caused the Ever Given’s grounding. The crux of the legal battle, however, comes down to which side bears responsibility for the transit. Egyptian law makes it clear that SCA pilots – who provide captains with onboard guidance down the waterway rather than actually steer the vessels – aren’t liable for any damage to a ship under their watch.
However, the ship’s third-party insurer, UK P&I Club, has stated that while the shipmaster is ultimately responsible for the vessel, navigation within a convoy is controlled by the SCA’s pilots and vessel traffic management services. The compensation case has been adjourned until July 4 to allow settlement negotiations out of court.
Expansion will not be cheap!
Sail North along the Suez Canal and there’s a familiar onshore sight accompanying the mosques and vestiges from Arab-Israeli conflicts – dredgers. They’ve returned to shift some of the 30,000 cubic metres of earth it took to free the Ever Given. It follows an announcement by SCA chairman Osama Rabie that the Suez Canal was to be expanded in the aftermath of the blockage.
Currently, vessels sail tight against the sandy banks along the 193-kilometre-long passage of water which, at its narrowest, is just 205 metres wide. The plan is to widen the southern stretch of the canal, where the Ever Given got stuck, by 40 metres and deepen it by another two metres. A second canal lane, north of the Great Bitter Lake to allow two-directional traffic, will be extended by 10km on the southern side of the lake so more ships can pass.
The expansion won’t come cheap. “The last one was in 2015 and that cost over $8bn,” says Sal Mercogliano, a former merchant mariner and associate professor of history at North Carolina’s Campbell University. “They’ll need to raise funds.” A large settlement fee for the Ever Given could, if secured, be put to good use. The Egyptians hoped that their last investment would attract more vessels and bring in more transit fees. Instead, explains Mercogliano, it simply led to megaships like the Ever Given. “Rather than a greater volume of ships, it led to a greater volume of trade – bigger boats.”
And an even bigger Suez Canal could, in theory, lead to even bigger boats. The Ever Given, a giant of the oceans, is nearly as long as the Empire State Building is tall. Fully loaded, it’s as heavy as 2,000 blue whales. And, at this huge scale, it’s already pushing existing infrastructure to its absolute limits.
It’s a megaship too wide to fit through the Panama Canal, and can only dock at ports which have fitted Super-Post-Panamax cranes. In Rotterdam, where the Ever Given was headed, the gantries overhang by 50 metres to reach across vessels up to 25 containers wide. These monster cranes stand 135 metres tall and weigh approximately 2,000 tonnes each.
There are other architectural issues. “You have to consider the relationship between hull, length and beam,” says Newcastle University naval architect Paul Stott. That means fattening a ship would also require lengthening it – and that creates stability issues. The next constraint is depth. In naval engineering parlance it’s called the Malaccamax: a ship capable of fitting through the shallow waters of the Strait of Malacca between Malaysia and Indonesia.
At 25 metres, it will still be deeper than the expanded Suez Canal – which will be just 22 metres deep where the Ever Given ran aground. “In theory, you could build a ship as big as you like,” Stott says. “What limits you is the physical infrastructure. We’d need deeper harbours, bigger cranes, wider gantries.”
The wide range of products on Ever Given
Name a product and it’s probably on the Ever Given. Its 18,300 containers hold everything from IKEA furniture to dildos, from microchips to pillow cases. Sharma’s clients insured goods like barbecues, swimwear and camping equipment which were meant to be on shelves in time for summer.
“Companies are having to make arrangements to send replacements or use air freight – it’s a logistical hassle,” Sharma explains. British businesses big and small have been affected. One bicycle maker has $100,000 worth of product aboard the ship, while retailers like Halfords are in danger of running out of bikes due to shortages of components such as brakes and cables which remain stuck on Great Bitter Lake.
Sharma is now launching a separate legal bid on behalf of his clients to challenge the arrest of cargo. Alongside lost cargo, businesses are also facing ‘general average’ costs. This principle of maritime law means that if shipowners incur losses for the common good, everyone – including cargo receivers – is asked to proportionally share expenses.
Huge shipping delays
The blockage may have been only six days, but the Suez Canal held up more than 400 vessels – equivalent to nearly $60bn of trade – causing an estimated 60-day shipping delay. It placed huge pressure on global supply chains already creaking under intense consumer demand as a result of the pandemic, and operating at a breakneck pace to catch up from various lockdowns. Those chains may not have snapped, but they’ve been severely weakened. There are only so many ports and dock workers to shift goods around the world.
By June, more than five per cent of all the world’s container fleet was waiting outside one of the world’s ports. Longer queues mean fewer containers available for new orders. Prices, therefore, surge. According to supply chain advisors Drewry, freight rates are currently triple the five-year average: it costs $10,522 to send a 40-foot container from Shanghai to Rotterdam by sea.
“The Suez Canal blockage created a lot of bottlenecks,” says Diego Pantoja-Navajas, vice president of the warehouse management software development unit at technology firm Oracle. “Much of the physical infrastructure we use to meet modern day demand was built in the 19th century. We’re developing faster response times and technologies, but we’re limited by the physical world which can only be updated bit-by-bit.”
But it’s not just rising costs which are causing problems. Frail supply chains, exacerbated by the Ever Given, are impacting production. Pantoja-Navajas estimates that more than three million cars won’t be made this year due to a scarcity of semiconductors, caused by a global shortage of silicon chips, costing the automotive industry billions of dollars. “Certain products weren’t going into manufacture in the aftermath of the blockage. Electronics have been affected more than most and have faced delays.”
Rift in global shipping
A globalised shipping industry is more vulnerable to geo-political rifts, natural disasters and man-made catastrophes wherever they occur on the planet. New Covid outbreaks in the south of China are either shuttering or reducing capacity at major international ports. That includes Yatian, one of the largest container terminals in the world – and the main port in the region for exports destined for Europe and North America.
Those closures may have caused a shockwave on the other side of the globe but, like the Ever Given, its ripple effects will be soon coming to these shores. “This is the world’s manufacturing centre we’re talking about,” says Pantoja-Navajas. “Anything you can think of: consumer goods, automobiles, plastics, textiles. Cargo leaving Yantian today will take six weeks or so to travel to Western markets. That puts us on top of back-to-school shopping and frighteningly close to the holiday shopping season.”
Meanwhile, the Ever Given remains anchored in Great Bitter Lake. It’s a fully operational ship, fully manned by a crew, loaded with goods worth hundreds of millions of dollars which could ease supply chains crippled by the pandemic. Yet, it’s stuck – jammed by a labyrinthine legal battle that shows no signs of ending. While negotiations rumble on and a general average claim brews, the shipowners have also launched limitation proceedings against the ship operators Ever Green in London’s High Court.
The sorry saga underlines the fragility of world trade. It took just one gust of wind to bring the whole thing to its knees. Another stuck boat, another Covid outbreak, another political crisis looms over the horizon. “If it’s not the Suez Canal today, tomorrow it’s the hurricane season and tension in the Middle East the day after,” says Pantoja-Navajas. “It’s not a question of ‘if,’ it’s ‘when.’ Supply chains will never return to normal. Managing crises is the new normal.”
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Source: Wired
