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JAPANESE OWNER OF VESSEL STUCK IN SUEZ CANAL SAYS IT RECEIVED NO COMPENSATION CLAIMS
March 31, 2021
EVER_GIVEN_(49643352087)

Shoei Kisen Kaisha, the Japanese owner of the giant container vessel that caused blockage at the Suez Canal for almost a week, said it has not received any compensation claims for damages caused by the incident in one of the world's busiest waterways. 

 

A company official said they continue to investigate the cause of the incident, insurance payment cost, as well as possible compensation for damages.

 

“There have been no claims or lawsuits against our company related to the incident,” Yumi Shinohara, deputy manager at Shoei Kisen’s fleet management department, said as reported by Reuters on Tuesday.

 

The 20,000 TEU-class container ship, EVER GIVEN, currently leased by Evergreen Marine Corp. under a time charter agreement, ran aground and became lodged sideways across the waterway on March 23.

 

The Suez Canal Authority was forced to temporarily halt navigation through the waterway on March 25 and the ultra-large container ship — which was deployed on a Far East-Europe service route — was successfully refloated on May 29. 

 

Shipping resumed late on that same day, with announcements that the 400-metre-long (430-yard) vessel will be transferred to Great Bitter Lake to check for damages with the aim to return the ship to the route “as soon as possible.”

 

“We are still investigating the cause of the incident and the cost including insurance payment and potential compensation for damage,” Shinohara of Shoei Kisen added, without further issuing more details.  

 

EVER GIVEN has 25 Indian crew at the time of the incident and the vessel has a Panama registration.

 

Industry sources earlier said the owner and insurers of the ultra-mega ship could face millions of dollars in total claims mainly revolving around machinery damage and claims from other vessels that had to deal with delays.

 

“Large loss event” to reinsurance industry

 

Fitch Ratings said the blocking of the Suez Canal — resulting in disruption to global shipping is likely to cause a “large loss event” for the reinsurance industry.

 

The ultimate losses will depend on how long it takes the salvage company to free the container ship completely and when normal ship traffic can resume, but Fitch estimates losses may easily run into hundreds of millions of euros,” the rating agency said in a statement.

 

Accidents involving large container ships can cause property claims of over US$1 billion, but these are mostly related to salvage. As Ever Given should still be able to travel once freed, claims related to hull and cargo insurance, including salvage (which will be borne by the shipowner’s hull insurer), should remain significantly below this level,” it added.

 

However, Fitch noted that the shipowner’s protection and indemnity club will probably also face claims from the owners of the cargo on the EVER GIVEN and of the other ships that are blocked in the Suez Canal for losses related to perishable goods and supply chain disruptions.

 

In addition, it said that they may face claims from the Suez Canal Authority itself for loss of revenues as more than 300 ships are stuck at either end of the canal. 

 

“A large share of those losses will probably be reinsured by a global panel of reinsurers,” Fitch said in its statement.“In isolation, this large loss event should be neutral to their credit profile.” 

 

Reports said the ship’s hull is insured by Japan’s Mitsui Sumitomo Insurance, which is under MS&AD Insurance Group Holdings Inc, Tokio Marine & Nichido Fire Insurance Co and Sompo Japan Insurance Inc while UK P&I Club has said that it was the protection and indemnity insurer for EVER GIVEN.

 

Evergreen: Shipowner responsible for losses

 

Separately, German insurer Allianz said any damage caused to the vessel during the incident will be covered by hull and machinery (H&M) insurance — which will also cover the costs of the salvage operation, including the freeing, refloating and towing of the vessel. 

 

“There are many scenarios for third party liabilities that might arise from an incident including any damage caused to infrastructure or claims for obstruction. These are typically covered by one of 13 mutual insurance groups globally (so-called protection and indemnity insurance clubs) which provide marine liability cover to shipowners for approximately 90% of the world's ocean-going tonnage (in the case of this incident it is the UK P&I Club),” it said in a statement.

 

“Liability claims may come from organizations such as the Suez Canal Authority for loss of revenues (and also potential damage to the canal), as well as from other vessels blocked in the area (business interruption/loss of hire, or claims for compensation of cargo delays),” the German insurer added.

  

Meanwhile, Taiwanese transport shipping company, Evergreen Line, already said earlier that Japan's Shoei Kisen Kaisha — the ship's owner — is responsible for any losses.

 

“As the vessel is chartered, the responsibility for the expense incurred in the recovery operation; third party liability and the cost of repair (if any) is the owners,” Evergreen has said.

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