Egypt demands over $1B in damages after Suez Canal blockage
trtworld.com
trtworld.com
On the other hand, the Suez Canal has had a lot of time to even begin construction of a second canal on the southern stretch and hasn't. I'm sure now they will consider that a higher priority as if this block happened further north where there are two canal lanes this wouldn't have been as big an issue.
I agree that reparations for the actual true cost of the salvage are due -- the cost of the tugboats, the dredger etc, but to pay damages on lost revenue due to a freak weather occurrence (if that was the case) and the lack of the Suez Canal to build out their infrastructure is disagreeable to say the least.
Traders would sometimes take a hit even for a good argument. There is no fun in making 10x money that way. They want to earn it.
You will find such traders in all over West Asia/arabic world like Egypt, Istanbul and as far off as delhi, not everyone is like that however, plenty will straight up cheat.
Elsewhere, there’s always a degree of horse trading, but the focus is on getting the deal done - here, the focus was very much on doing the deal. The negotiations over terms were far more of an assessment of us than the RFQ and the pitch were, whereas with western brands, the inverse is true.
Besides that, new risks associated to this route may push shippers to look more closely to an alternative route. Northern route is much shorter, does not have vessel size limits and it becomes more easier to navigate with global warming. It's not hard to imagine ice class nuclear merchant ships carrying 30-40k TEU there in 10 years.
This is very hard for me to imagine.
Imagine one of these with stuff on it.
The only question is if it is economically viable at current level of technology.
At one billion I reckon its a matter of foreign relation so they won't be ripped off in a dark back alley.
And in return they receive protection from other claimants, who will have to bear their own risks no doubt.
Especially if it was force majeure as the GP implied.
My guess is that if Egypt decides to push responsibility entirely on the ship's owners and operators then it would open itself up to more vocal criticism from other customers afraid of also being sued for mistakes caused by Suez being unfit.
Yes. It is. And to be insured against it happening. So at this stage the Egyptian authorities don't necessarily know who they are picking a fight with.
If there was a sandstorm with strong winds that pushed the ship aground what could the captain do? Dismiss the pilot and gain control of an already out-of-control ship? The pilots know more about this area, so before the point of no return the captain, I'd imagine, would trust their judgement. Remember: pilots from port authority's are experts about the ports they pilot through.
Also, the pilots are not meteorologists and even if they were how many times does your local weather station, or mine, or anyone else's, get the weather forecast wrong.
Huge ships of this size have so much momentum that I'd imagine as a captain or a pilot or anyone else who works in the bridge concerning the ships movement has to plan dozens of minutes and kilometres in advance. Want to stop the ship? That requires about 3 Km of runway. Want to turn around? About a 2 Km radius of turn space required. That's a lot of planning. By the time the ship is definitely running aground it's too late to do anything about it and before then the best the captain can do is "umm" and "ahh" every decision the pilots are making.
Yes there should be an insurance claim but it's not against the Ever Given it should be against this freak weather event much like how if a tornado blows a house down you have a claim for a natural disaster and not a claim against your local council you live in.
This isn't quite true and has to be worded carefully to explain how responsibility is assigned.
The ship is not allowed permission to come into port/harbor/canal without a local pilot on board. That's very different from relinquishing control to the local pilot.
The local pilot acts more like an advisor and guide for navigation but the ship's helmsman & captain still retain physical control of the ship's speed and steering.
From the reports I read of this specific Ever Given incident, the local guide pilot didn't command the helmsman to speed up to 13 knots. The ship's captain is still ultimately responsible for what happens.
Does that mean that even when I'm required to use the local pilot, he still can't be blamed for things going wrong?!? Yes, that's how it works. The ship has no choice of not accepting that deal if it wants access to that port.
EDIT : I found a video with a chief engineer from a cargo ship explaining maritime responsibility. Deep link: https://youtu.be/ltdHRdtEHE4?t=3m14s
I dont know much about ships, but thanksfully on land law doesnt work that wY
The pilots don't drive anything. they are only supposed to advice on local geography and weather etc.
Most experienced captains will basically ignore them and keep them in their cabins for the journey in crossing the suez.
The system is inherited from hundreds of years maritime practice, back in those days pilots were essential to maneuver through local complexities in geography and weather, and were bribed for better service/smuggling etc.
Giving bribes in ports is very old practice even the US navy got into hot water recently in Asia for it.
I thought these where on board in advisory, hands-off-controls roles only.
So the real fight will happen around the cabin logs and recordings, to whether the ship pilot followed all the advisor pilots demands or not, and even then it is going a long, complicate mess to pin down responsabilities.
But the log will eventually surface and these will be super interesting.
Besides such interactions do not need to be conducted on the bridge at all.
Lot more likely the insurance company will negotiate for actual salvage plus some compensation to the government, plus few palms will be greased.
It makes no sense for the lost transit fees to be paid by the insurance companies as most vessels waited the 6-day period and then got to traverse the canal with some days in delay (so Egypt still got that money).
In the end the claim seems exaggerate and might be indicative of Egypt's lack of focus on long term relations. It's one thing to pay 500'000 USD for a passage, but if I know that I have a 0.05% probability of paying 1 billion dollars (which is another 500'000 USD expected payout on average) then surrounding Africa without any fees is all of a sudden a lot more attractive.
I really wish it was named something else, because it causes all sorts of confusion:
> A common misconception about no-fault insurance is that insurance companies won't determine who is at fault after an accident. However, this isn't the case. According to the Ontario Insurance Act, in every accident with multiple drivers, insurance companies must always assign a percentage of fault to each driver involved. Other provinces have similar laws.
> No-fault insurance simply means your insurance company will handle your claim and pay your damages regardless of who is determined to be at fault for causing the collision. The other person’s insurance company will do the same.
* https://www.insurancehotline.com/resources/no-fault-insuranc...
There are legislated rules on determining fault in the most common cases:
* https://en.wikipedia.org/wiki/Ontario_Fault_Determination_Ru...
Except during those six days no ships went through, and so no revenues were collect. That is, Egypt could have gotten more revenue if no ships were delayed—and remember some ships started going around Cape Horn in South Africa.
It's about the 'opportunity cost' of the blockage.
Also I am not a lawyer, but if I were one, I would wonder if there have been previous outages like this and how has that cost been recovered? And how many times has the canal delayed the ships anyways and not paid them?
Also would the canal pay from this money the ships that were delayed as they were also an affected party.
The game can be played from multiple sides.
> It's about the 'opportunity cost' of the blockage.
(Probably unfortunately behind a PayWall)
The super short summary is that they say a further expansion is not necessary. Even the previous one wasn't needed an hasn't brought in the benefits they had hoped/promised.
This is a slightly complicated issue: the ship was being piloted so the person with the authority is basically the pilot (someone who’s job is to take ships through the canal but not anywhere else). The captain can order the pilot off the ship (and then take control) but not much else. And doing that in the middle of a sandstorm would probably not be so clever.
Seems most boats that wish to transit have to come prepared with many bribes, and be ready for multiple shakedowns: http://www.sailsafely.com/suez_canal.htm
Clearly this is Egypt's authorities trying to save face and deflect blame for their failure to provide actual, competent piloting.
I dont hear this being a once-in-a-century sandstorm.
This may not be a recurring ocurrence precisely because weather-induced groundings on that zone are particularly strange, because its not an area with weather that can impair a bih ship cruising by
The second part of your sentence does not follow from the first part. If you have a large storm every with low but non-zero probability (and, actually, a higher probability than 1/(36575) given the weather conditions, let's say 1/(4075) = 1/3000) - then the parties to the agreement regarding the use of the canal need to plan for this contingency; and I assume the contract governs who has responsibility for such planning: The canal for salvages/re-floating, or the ships for being able to maintain buoyancy even in this kind of conditions.
In other words: The point is not to predict the occurrence, it's to be ready for when it occurs.
--
PS - I've ignored the question of insurance.
An interesting hypothesis that I ran across (on gCaptain? blancolirio?) is that it may actually have been a wind lull that caused the issue.
There was supposedly a steady cross wind in the area in question, and given the ship is 400m long and 13 storeys high, that's a lot of area. The wind seems to have been coming from the west/port-side, so the ship had rudder to port to counteract the pushing to starboard/east.
When the wind dropped suddenly, the pushing-to-starboard force suddenly disappeared, and so the steering to port all of a sudden became 'unnecessary' and if it was not corrected soon enough may have been the reason why the ship steered to port and into the channel wall.
Just an hypothesis though.
I'm sure a sorts of folks will be looking at the sensor logs.
I wonder if the Canal authority has any kind of instruments along the route to measure conditions. If not, they should consider it. Perhaps set up some "buoys" on land next to the channel that broadcast things out via AIS so pilots and captains can see things on their chart plotters.
Here [1] is a link from the Financial Times that talks about the hypothesis you mention, where a combination of a lull in the wind and the bank effect pushed the bow of the ship away from the bank while pulling the stern in.
The whole statement was target towards the Egyptian audiance. Standard Arabic propaganda show.
Knowing how things work in Egypt. I bet the whole thing will be settled for a couple of million usd and an undisclosed amount of Marlboro packets...
They have a bunch of angry pilots on their hands because they spent a whole week not able to collect any bribes.
> Bernhard Schulte has said previously that two Egyptian canal pilots were aboard when the ship got stuck. Such an arrangement is customary to guide vessels through the narrow waterway, but the ship’s captain retains ultimate authority, according to experts.
With tens of thousands of ships making that passage each year, it was bound to happen sometime.
The sandstorm is just an excuse IMO...
Remember that Egypt nationalized (stole) the canal in the first place from the UK. The only reason they were not bombed to oblivion was that it suited US goals of further humiliating former European imperial powers after WWII. Egypt operates tha canal as spoils of war and their only real concern would be if shippers begun considering the risks of relying on the Suez authorities higher than going through the Horn of Africa.
Nasser paid full compensation for shareholders based on the share price of the company on the Paris Stock Exchange, as he had said he would before the nationalisation.[1] So this was not much different to the nationalisation of companies in the UK that had been happening around the same period,[2] or to the compulsory sales that happen even now in the US.[3]
> only reason they were not bombed to oblivion was that it suited US goals
There was also the Soviet threat against the UK and its allies in the war.
1. https://www.irishtimes.com/news/suez-affair-highlighted-brit...
2. https://www.bbc.co.uk/bitesize/guides/zsd68mn/revision/6
3. https://www.wsj.com/articles/trump-orders-chinese-firm-to-se...
I'm not a fan of Arab governments but this comment reads like an angsty 14-year-old nostalgic for the empire they learned about in school.
- The ship had, as required, two pilots on board at the time. These are agents of the canal and have ultimate authority during the passage.
- the loss in fees seems far smaller, and can easily be counted by the numbers of ships that went the long way around.
- I doubt the salvage operation got close to that cost. There just isn't enough equipment to lease to run up a billion in four days or so., even counting stuff that may have never arrived
- Egypt still knows it's French. Force Majeur should ring a bell.
That being said, I wonder if it matters? They could have the right, or at least the power, to simply refuse passage to all vessels operated by the company. Egypt is probably party to some international agreement precluding arbitrary decision in that regard for political reasons. But they'd obviously be allowed to do so for vessels not paying the regular fee. This case would seem to resemble the latter more than the former?
I'm not being snarky; can you just make it explicit in your comment instead of leaving a vague comment linking to something that takes 15-20 minutes to read?
If $1bn were the 'true costs' then clearly there are a lot of costs in running the canal over a year. It seems like the number is highly inflated, on face value. Not an expert, just an observation.
Well - Either you allow gigantic ships that have this risk through, and set aside cash for when shit like this eventually happens - Or you don't allow them through at all. Learn how to budget for your risk profile.
Wow. Is that a lot for a ship that size or just standard? Anyone know what it was carrying?
A couple of containers filled with Cpus, Gpus or other small pricy items adds quickly up hundreds of millions of usd.
The Ever Given was carrying around approx. 18 000 containers
So that is an avarage price of around 150 000 usd, per container. That is equal to around 150 iphones. Or 300 ryzen 5950x cpus.
Here is a reference pic to see how much volume are 150 iphones.
This is a mind-boggling number, I didn't realize those ships carried so much load. Insurance premiums must be crazy
Passage fees on the Suez can run up to half a million usd for a ship this size.
> the Ever Given and its some $3.5 billion worth of cargo would not be allowed to leave Egypt
When does it become piracy?
Never. The Egyptian government could simply issue itself a letter of marque. But a country impounding a ship while it is within its sovereign territory over unpaid fees would never be considered piracy anyway.
According to the article, $3.5Bn.
> $3.5 billion worth of cargo