The Suez Canal, owing to the peculiarity of its construction, has always been prone to accidents. During the past twenty years, however, its incident rate has hovered around 1 in 1100 crossings. The last upgrade of the canal, completed in August 2015, theoretically reduced the risk, but in practical terms actually increased it by allowing much larger ships to transit through. Since the reopening of the canal following the Camp David accords of 1978, no single incident has shaken up the system as violently as that of the Ever Given episode.
The MV Ever Given, an Ultra Large Container Vessel with a carrying capacity of around 20,388 TEUs, got grounded on 23 March 2021 in a narrow single-lane southern section of the waterway. Though neither the ship nor its cargo suffered much damage, the grounding, by virtue of completely blocking the canal for traffic, shook Egypt in general and the Suez Canal Authority in particular. The ship appeared to have veered uncontrollably off course and got wedged sideways, blocking both northbound and southbound traffic.
The ship’s backstory is an interesting one. It was constructed in a Japanese yard (in 2018). It was time-chartered by the yard’s ship owning and leasing subsidiary to a Taiwanese shipping company. A German ship-management company is overseeing the ship’s operations and crew. It’s 25 member crew is wholly Indian. It flies the Panamanian flag. The companies chosen to handle the salvage operation are Dutch and Japanese. The Salvage Master who led the operation is South African. All in all, a global enterprise.
The ordeal of the Ever Given is a gripping one. That it was grounded in a strategically vital waterway was bad enough. What made it worse is that it ended up in the worst part of the canal, a narrow section with only one lane. In doing so, it held up 367 ships and 80 billion dollars worth of merchandise by the time it was freed. Many large-sized vessels were also reportedly diverted by their parent companies to the longer route around the Cape of Good Hope.
Ever Given was admittedly the largest vessel in the convoy, but then many similar sized ships had successfully traversed the canal. There was however a sandstorm raging at the time, restricting visibility, with winds gusting up to 50 knots. The ship’s captain was at liberty to postpone the passage, as some ships in line reportedly did, but he preferred to plow ahead, ostensibly to avoid losses to the company. He obviously preferred to place his trust on the experience and dexterity of the SCA pilots, two of whom were onboard on such a large ship. Whether the pilots rendered any advice as to passage in such inclement weather is uncertain.
It is apparent that the canal’s depth wasn’t as much of a problem as its width, which left little wriggle room for a ship of this size. The strong winds made it difficult for the ship to follow a predetermined track in the middle of the lane, and as it kept veering to port and starboard, the Captain was reportedly at his wit’s end, while the two pilots kept arguing about what actions to take. The lead pilot decided to increase speed to counter the wind effect, but by giving the ‘full ahead’ order, the ship’s speed shot up to 13.7 knots, 5.7 knots faster than the canal’s recommended speed limit. This resulted in lowering the fluid pressure between the ship and the bank, further transferring the initiative to the forces of nature. An increase of speed coupled with an angled course against the gusting wind was probably needed under the circumstances. In this case, however, the wind, aided by the huge stacks of containers onboard, which acted as a mammoth sail, took charge, thrusting the stern towards the west bank. This in turn forced the ship’s bow clockwise to the east, and with the water cushion pressing from its port side, the ship’s bulbous bow got embedded in the east bank. It’s grounding impacted the SCA, the owner, the charterer, the insurer, the consignees and the exporters. The dilemma which led to this grave situation was that while at low speeds, particularly in narrow confined waters, such huge ships are difficult to manoeuvre, an increase in speed leads to the so-called ‘bottom effect’ which causes the ship to sink dangerously low in the water. The Canal Authority was however quick to deflect criticism by pointing to its safety record: 18,840 vessels had traversed the canal in 2020 without incident.
A rescue operation was immediately put into play within 35 minutes of the grounding. A digger was initially used to excavate the bow, while SCAs eight tugs toiled hard to pull and push the vessel free. But after two luckless days, the cavalry was called in, so to speak, with Smit Salvage of the Netherlands and Nippon Salvage of Japan being appointed as the salvors.
The two dredgers deployed had to excavate approximately 30,000 cubic meters of sand beneath and around the vessel before the push and tow manoeuvre undertaken by 13 tugs, including two powerful sea-going ones, proved successful in restoring 80% of the vessel’s direction. Though the stern had been moved 102 meters away from the canal’s bank, it was the ‘king tide’ produced by a full moon that, by generating a few extra inches of tidal flow, finally enabled the Ever Given to refloat.
After 7 days, 6 hours and 48 minutes of ‘captivity’, the ship was taken to the Great Bitter Lakes ostensibly for technical inspection, though a far longer period of incarceration on the orders of an Ismailiya court pending resolution of monetary disputes, lay in store.
By impounding the ship, SCA gained a tactical advantage: it placed the onus for reaching an agreement as early as possible on the ship’s owner. From a legal perspective, SCA was well covered. As per the Suez Canal regulations, the pilot or pilots are simply there in an advisory capacity. The SCAs Navigation Book of Rules specifies the speed limits in the canal and maintains that exceeding the prescribed speed is ‘the sole responsibility of the Master’. SCA would have been conscious at the same time that a failure to maintain cordial ties with the ship’s owner as well as the charterer would be damaging to its future business interests. An early compromise was thus well within the realm of possibility.
The compensation that SCA sought was meant to cover losses associated with salvage operations, stalled canal traffic and lost transit fees for the week the vessel remained grounded. The amount that it was initially asking for (US$ 916 million) was considered excessive by the ship’s owner, who were only offering $150 million, and the demand was subsequently lowered to $550 million. In early July, the Egyptian court adjourned proceedings for a week to enable the two parties to reach an amicable settlement on their own. An agreement was finally concluded on 8 July, with the vessel being freed. The compensation amount has not been revealed so far owing to a temporary non-disclosure clause. What is known is that the SCA, as part of the settlement, will be gifted with a 75 tonnes bollard pull tug.
Though Round One (freeing of the vessel from custody) is over, further legal battles lie ahead. Soon after the incident, the ship’s owner had reportedly filed a lawsuit in the London High Court against the ship’s operator and all other persons likely to claim damages. Apprehensive of the compensation claims likely to arise, the owners are believed to have declared General Average and appointed a legal adjuster. GA is normally declared in cases where an extraordinary loss has occurred. The adjuster fixes the salvage security (in % terms of cargo value) and GA deposit (again in % terms). Cargo insured is covered by the insurer, while non-insured cargo shippers are left high and dry. Recourse to the GA procedure is however a rarity, with the last such declaration being in 2018, which pertained to the fire incident onboard the Maersk HANAM.
But now that a settlement has been reached between the ship owner and the SCA, which presumably also includes the overall cost of salvage ops, it is not clear whether the GA procedure will still go ahead. The shipowner’s liabilities are believed to be covered to the extent of $3 billion through various Protection & Indemnity Clubs, and hence the news about the resort to GA procedure, if true, was probably an overreaction. The one positive take away from the incident is that a further upgrade of the canal, focussing on the narrow southern section, has been approved for completion in two years time. But as far as legal challenges are concerned, it will be interesting to see how they pan out in the coming years. Both the owner and the Captain have been tight-lipped for now, but one never knows what revelations may subsequently come out. SCAs sole interest thus far has been to obtain maximum compensation, while defending its pilots and shielding them from scrutiny. Eye witness accounts have however painted a not-too-complimentary picture of the two pilots, with both rarely seeing eye to eye with each other, and continuing to argue even as they were exiting the ship. And although the pilots are there in an advisory capacity, the lead pilot was heard giving direct orders to the helmsman, and when the master tried to bring the ship back on track, the pilot hinted darkly at washing his hands off the whole affair. Then there was the question of tug employment; these are controlled directly by the pilot. Although two tugs did accompany the ship during its transit as per the Suez Canal regulations, they were never in position to assist in keeping the ship on track. A lot of new information will come out as the drama continues to unfold.
