Customers always faced with new payments to move shipments forward
The legal quagmire that has kept Ever Given anchored in the Suez Canal is stopping thousands of containers with cargo whose owners now face new payments and complications to get their long delayed shipments.
The boxes, which likely contain consumer goods, industrial parts and other goods bound for Europe, are stranded as the massive container ship is shrouded in rival claims stemming from the nearly week-long effort to free the ship which was taken last month in one of the canal’s canals. narrow trails.
The deadlock leaves freight customers in limbo under international maritime law and contractual arrangements that can date back centuries and may require freight forwarding companies to share the costs of getting vessels out of distress.
Legal complications became more obscure on Tuesday when Egypt said it had seized the Ever Given to force the ship’s owner, Japanese Shoei Kisen Kaisha Ltd., to settle claims for canal damage and loss. totaling approximately $ 1 billion.
Shoei Kisen is asking customers with cargo on board to pay part of the costs of freeing the ship from the canal bank, which are estimated to be around $ 2 million, according to those involved in the case.
Shoei Kisen’s insurance program officials said a total of more than $ 3 billion in insurance was in place for liability claims.
The parties are awaiting the conclusions of an investigation by the Suez Canal Authority into the cause of the accident. Freight owners will likely be among the first to pay as they seek to move their containers as legal issues are resolved.
But before the ship can sail, cargo owners will need to pay a security deposit of around 10% of the cargo’s estimated value to ensure that they will meet an insurance expert’s resolution when the final invoice will arrive.
This deposit will be processed by insurers according to principles called general average which are included in freight invoices and insurance documents.
The practice of sharing the cost of moving a trapped ship stems from the Rhodesian Sea Law, a set of rules that governed maritime commerce and navigation during the Byzantine Empire from the seventh century onwards. The law has decreed that if goods have to be thrown overboard to lighten a vessel, all customers with goods on board will share the cost of the lost goods.
If the parties did not agree to contribute, a vessel could be seized to pay for collection costs or other damages.
The practice was formally adopted by the global shipping community under the so-called York-Antwerp Rules from 1890. The rules are part of generally accepted principles of marine insurance and have been regularly amended by international maritime organizations, most recently in 2016.
Thousands of customers with products on Ever Given could be placed under the legal umbrella. The vessel, operated by Evergreen Marine Corp.
from Taiwan, was carrying some 18,000 containers, in the standard maritime measurement of 20-foot equivalent units, on a trip from Asia to Europe when it crashed into a side of the canal on March 23.
With so many containers on board, the overall potential liability could run into the tens of millions of dollars.
For general average purposes, the insurance industry values cargo at around $ 20,000 per box, according to Allen Marks, maritime lawyer and partner at London law firm Campbell Johnston Clark.
“But the process is complicated because some owners can move low value goods like scrap metal and other more expensive goods like laptops and tablets, and the expert will have to take that into account,” Mr. Marks said. . “I expect the process to take between three and four years.”
“The general average damage process will take years to sort through the largest Excel sheet you’ve ever seen.
Danish container operator AP Moller-Maersk A / S declared general average in 2018 when the Maersk Honam caught fire in the Arabian Sea. Cargo owners had to incur costs of up to 54% of the value of the cargo to have their boxes shipped, according to those involved in the case.
The names of customers with merchandise aboard the Ever Given were not disclosed. American furniture maker La-Z-Boy Inc.
said at an investor conference on March 24 that he had five containers on the ship.
John Miklus, president of the American Institute of Marine Underwriters, said he expects the ship to move soon and complaints to be dealt with later.
“The ship will be freed because if the Egyptians want people to continue using the Suez Canal, they cannot hold it for ransom. The general average damage process will take years to sort through the largest Excel sheet you’ve ever seen, ”he said.
—Jennifer Smith contributed to this article.
Write to Costas Paris at [email protected]
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