Insurance industry on the hook for millions over grounded Suez Canal cargo ship
The insurance industry faces a mammoth bill after a giant cargo ship continued to block the vital Suez Canal.
The 1,312 ft long, 224,000 ton Ever Given ran aground at both ends on Tuesday, completely blocking Egypt’s waterway for the first time.
Salvage efforts by smaller tugboats have proved unsuccessful, and an ‘elite salvage squad’ from the Netherlands has now been drafted in.
Stuck fast: The 1,312 ft long, 224,000 ton Ever Given ran aground at both ends on Tuesday, completely blocking the Suez Canal for the first time
The ship’s owner, Japanese firm Shoei Kisen KK, and its insurers are on the hook for millions of pounds of insurance claims due to the cost of the salvage operation as well as the trail of shipment delays caused by the blockade.
The ship was insured in the Japanese market for hull and machinery damage of £100million.
In addition, owners of the cargo on board the ship and on other ships stuck in the canal are likely to claim for losses to perishable goods or missed delivery deadlines.
‘If you have a constant build-up of ships, there are massive supply chain issues,’ said Marcus Baker, the global head of marine and cargo at insurance broker Marsh.
Industries likely to be affected by the blockade include car and food manufacturers who operate ‘just-in-time’ supply chains.
Cargo ships are being rerouted around South Africa’s Cape of Good Hope, adding 6,000 miles to a journey to Europe and £220,000 in fuel costs for a supertanker.
Oil prices fell sharply because of worries about demand due to new pandemic restrictions in Europe. Brent crude dropped as much as 4.7 per cent to a low of $60.98.
The slump came a day after oil rose around 6 per cent on fears the Suez blockade would hit supply.