THE SUEZ CANAL BLOCKAGE CRISIS AND HOW IT AFFECTS INSURERS

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The Suez Canal provides the shortest sea link between Asia and Europe, seeing to about 12% of global trade passing through it. Recently, a giant container ship, the Ever Given, ran aground on the bank of the canal in Egypt where it remained stranded for six days blocking all ship traffic. According to data from Lloyd’s List, the blockage held up an estimated $9.6bn (£7bn) of goods each day – or $400m an hour. The blocking of the canal is expected to give rise to flurry of insurance claims, with Lloyd’s of London expecting a “large loss,” possibly amounting to $100 million or more, according to its chairman.

A crisis this massive is sure to have implications and one of the key parties facing the heat would be the owners and insurers of Ever Given. Business interruption claims, expenses borne due to the ship owners’ liability, hull and machinery damage and more are to be expected. In a time-critical situation such as this one, the longer the vessel remains stuck, the bigger the claim. During unfamiliar situations such as this, it is imperative to have the right experts onboard to assist in getting the situation under control and refloating the ship.

These experts include marine engineers and naval architects who will be able to assess the situation at hand and take the right steps to refloat the ship as well as reduce the vessel’s condition from worsening.

One of the attempts used to free the Ever Given were tugboats. Although a safe option normally, the vessel’s bow appeared to be grounded on a harder rock bottom which increases friction and may cause further damage to its hull. The experts called in to conduct loss investigation must be aware of key elements such as the tidal influence in the area and any wave effects caused by passing vessels as these could increase or decrease ground reactions.

Additionally, they must also know how to manage the stability in both stranded conditions and the eventual afloat conditions. A crewmember would typically attempt to free a vessel by deballasting tanks low in the ship. A Chief Officer of the vessel would be able to carefully consider the removal of weights to maintain stability in both conditions. In this case, as opposed to deballasting, they may opt to remove containers instead.

Other important factors to be considered would be the structural integrity of the vessel as its strength must be managed throughout the entire rescue process. Upon refloating, it is essential that possible damages are assessed and repaired. Once the container ship is brought in for an underwater survey, marine engineers and hull surveyors will be called to examine for any machinery or hull damage and get a repair or replacement plan going.

Besides that, there is also the matter of the cargo that Ever Given was carrying. Cargo owners would have suffered losses due to missed delivery deadlines, delays and more. This complex issue will be claimed through P&I insurers, but the exact number of ships covered is unclear as delay cover may possibly only be held by a small number of the affected ships.

As the capacity of the container ship fleet has grown, so has the risks for machinery, cargo, hull and P&I insurers. The best course of action is for insurers to partner with experts such as naval architects and marine engineers who are highly trained in these areas. Not only will this help all parties involved but could also help reduce the size of claims from similar incidents.

Onboard AGI’s team of professionals are two highly experienced marine engineers, Mr. Sujenthiran and Mr. Ruthreswaran. They bring more than just technical expertise to the table as both have over a decade worth of experience having spent many years being directly involved in cargo operations, machinery maintenance and repair, installations and more. Our marine engineers are able to skillfully assess crisis situation, analyse and establish the perfect rectification plan. Their practical insight of the marine industry is also highly advantageous in investigating insurance claims and ensuring that both the insurer and the insured are given the best of services.

Keen to enlist the help of our team of professionals? Get in touch with us today!

*photos source: https://www.bbc.com/news/world-middle-east-56516151,
https://edition.cnn.com/2021/03/26/world/gallery/suez-canal-stuck-ship/index.html

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BY APPROVED GROUP INTERNATIONAL (AGI)

Our mission is to provide scientific approach to forensic investigation, failure analysis and non-destructive testing; professional and economical disaster restoration.

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