The recent grounding of the Ever Given, a 220,000-tonne container ship, has blocked off the Suez Canal for almost a week and, in turn, has caused a massive traffic jam of approximately 300 ships waiting to use the Canal. This could lead to a significant interruption of global supply chains, already stretched by the effects of COVID-19, given that 10% of global trade passes through the Canal each year. Despite the welcome news earlier this morning that the stern of the ship had been pulled around by tugs, thereby unblocking the Canal, there remains a traffic jam that could take four days to clear, according to officials. Early estimates suggest that this could result in an insured loss of several hundred million dollars.
The Ever Given, owned by a Japanese company and operated by the Taiwanese group Evergreen, grounded last Tuesday. The vessel itself was insured in the local Japanese market, but some reinsurance may be placed in London.
UPDATE: After almost a week of blocking the canal, the Ever Given was finally re-floated on the afternoon of 29th March. According to the Suez Canal Authority (SCA) at least 369 vessels were waiting to transit the canal, including dozens of container ships, bulk carriers, oil tankers and liquefied natural gas (LNG) or liquefied petroleum gas (LPG) vessels. The SCA has said that it will take between two-and-a-half and three days to clear the backlog, with more than 100 ships able to enter the channel each day. Separately, the global shipping group Maersk has said the knock-on disruptions to global shipping could take weeks or months to unravel.
Alpha comment: This has the potential to be a wide ranging loss across the marine classes, affecting marine hull with potentially large salvage costs, marine cargo in respect of perishable goods claims, with the majority of the loss potentially falling on the International Group of shipowners Protection and Indemnity (P&I) reinsurance programme, which is heavily placed in London. This would cover claims for the loss of revenue for the Suez Canal authority and any damage to the canal itself. We will keep you advised of developments.