Ever Given cargo owners may have to pay for damages

The Ever Given, the container ship that ran aground in the Suez Canal at the end of March, has been impounded by the Egyptian authorities. By seizing the ship, they aim to enforce payment of US$900 million in compensation for the damages suffered. It looks likely that the cargo owners themselves will also have to pay some of the costs.

When the Ever Given blocked the Suez Canal, it paralysed a major world trade route. Normally, goods worth around US$10 billion are shipped through the canal every day. Besides the costly operation to refloat the ship, the canal authority suffered revenue losses because no other ships could pass through. Therefore, the Egyptian authorities are now looking for compensation to the tune of around US$900 million.

The Japanese ship owner Shoei Kisen Kaisha has been presented with the bill. However, there is a chance that the owners of the cargo will now be asked to contribute to the costs, because Shoei Kisen Kaisha has declared it a ‘General Average’ act. This means that the costs incurred for the salvage of the vessel and its cargo must be jointly borne. The key to this is whether the damage was incurred due to ‘force majeure’ or human error, and this is now being investigated.

General Average creates a lot of work

One thing is clear: the Ever Given will not arrive at its final destination – Rotterdam – for some time, since a General Average involves a lot of work to divide the costs proportionally among the cargo owners. This entails first establishing the ownership situation and value of the cargo in each container. Furthermore, because not all cargo owners are insured, it is highly likely that some will renounce their cargo because their contribution to the costs would outweigh the actual value of the goods.