The ultra large container ship Ever Given, which has been stranded in the Suez Canal for more than three months, is set to be released soon by local authorities subject to a written agreement with the owner, but the release of its cargo may take much longer, several sources with direct knowledge of the matter said June 25.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
The Ever Given, which was stuck in the Suez Canal for around six days in late March, was arrested by local authorities on April 13 over the non-payment of a claim that was initially assessed at $916 million, but reduced in May to around $600 million. The ship is chartered by Taiwan-based Evergreen Shipping Corp. and is loaded at close to its full capacity of just over 20,000 TEU.
The shipowner has reached an in-principle agreement with respect to the claims of the Suez Canal Authority, and a final formal settlement agreement is currently under negotiation, Evergreen said in a statement late June 24. The amount to be paid to the SCA over the claims was not disclosed.
"It may take some further time for the agreement to be concluded, for the vessel to be released from arrest and prepared for onward transit," Evergreen said in the statement.
The ship's owner Shoei Kisen Kasha has also confirmed through its insurer, the UK Protection and Indemnity or P&I Club, that an in-principle agreement was in place.
"Together with the owner and the ship's other insurers, we are now working with the SCA to finalize a signed settlement agreement as soon as possible," the UK P&I Club said in a statement.
The owner and the charterer did not provide a timeline, but the UK P&I Club said: "Once the formalities have been dealt with, arrangements for the release of the vessel will be made."
Cargo delivery timeline uncertain
Maritime lawyers and insurance executives that S&P Global Platts spoke with all cautioned that it may take much longer for the cargo stacked up in thousands of containers on the ship to reach the intended recipients in Europe.
"Typically, in the first instance, the claims are paid off by the [ship's] insurers, but eventually the owner will try to recover them from other parties," one insurance executive said.
Under standard procedures, this amount, which is paid as claims, is divided among the ship owner, charterer and the cargo owner under a General Average or GA adjustment.
The division is based on a mutually agreed ratio and is relatively easy when the cargo belongs to a single entity or a handful of entities, as is typically the case with dry bulk or oil tankers.
However, in case of container ships, the number of cargo receivers from a single ship can run into the tens of thousands, and the type of cargo can range from gaming consoles to avocados to trousers.
The amount of GA that each entity agrees to pay may be decided later but as a first step, the charterer will have to post a security deposit, or GA bond, the insurance executive said. This is to ensure that at least the owner agrees for the ship to start its voyage toward the destinations.
The Ever Given's scheduled ports of call are Rotterdam, Antwerp and Hamburg, and the containers are destined for locations across northern Europe.
The security bond is provided by the charterer and then divided among the cargo owners. This division is calculated by GA administrating adjusters, sources said.
"[Some cargo interests] have yet to provide a GA security bond to expedite this process in order to avoid further delay in cargo release and delivery at the port of discharge," Evergreen said in the statement.
Unless the owner company is guaranteed that it can recover part of the claims paid and expenses incurred to refloat the ship, it will not release the cargo, a maritime lawyer said.
Another insurance executive said that once the security bond was provided, the ship could proceed with its voyage and even discharge cargo at the designated ports, but the goods will only be handed over to the receivers once the GA amounts are received from them, or pledged in the form of an undertaking.
"Until then, the goods will be stuck at warehouses in ports," he said.
Evergreen has directed the entities inquiring about the Ever Given's multiple cargoes to the Charles Taylor company, one of the world's oldest GA administrating adjusters. Charles Taylor could not be immediately reached for comment.