Owners and charterers of ships unable to cross the Suez Canal for nearly a week face at least $ 24 million in expenses that they will not be able to recoup because their insurance policies do not cover them, according to reports. industry sources.
Up to 400 ships, including oil tankers and vessels carrying goods to consumers that had been stranded, are counting the cost after traffic on Egypt’s Suez Canal stops for six days.
A giant container ship that had been blocking the waterway since March 24 was refloated on Monday, the canal authority said.
Ships typically have various types of insurance, including protection and compensation (P&I) for pollution and injury claims. Separate hull and machinery policies cover ships against physical damage.
“Both rule out lost revenue,” said Claudio Blancardi, underwriting director of naval insurer Nordic Marine.
Shipping sources said daily expenses were estimated to be between $ 10,000 and $ 15,000 per day for each ship and should be written off. This includes tankers.
“Tanker owners don’t get demurrage (late fees) paid for delays in the canals, they incur the waiting days and costs on their own behalf,” a shipping source said under cover of anonymity.
Besides ship owners, ship charterers who lease the ship for an extended period would also not be able to claim losses in return, forcing them to cover those costs as well, according to the sources.
They could also face more than six days of lost spending as ships congested down the canal.
These expenses include additional fuel costs, days lost when the vessel could not complete its voyage, and additional supplies.
“It will take days rather than a day to clear the backlog,” said William Robinson, managing director of Charles Taylor Insurance Company.
Owners of cargo aboard the Ever Given container ship or other vessels delayed in the canal may also not be covered by insurance.
“In general, if you’re shipping anything other than perishable goods, you’re not buying delay insurance,” said Marcus Baker, global manager, shipping and freight, at insurance broker Marsh.
Fitch Ratings said on Monday that reinsurers could suffer losses totaling hundreds of millions of euros due to the lockdown.
However, industry sources have said that insurance and reinsurance claims are likely to primarily relate to damage to Ever Given itself and to the canal, as well as dredging costs.
UK Club, the P&I insurer of Ever Given, said in a statement Monday that it insured the shipowner Shoei Kisen for “certain third party liabilities that may arise from an incident like this – including, for example, damage to infrastructure. or obstruction claims. “
The ship’s hull is insured by the Japanese group MS&AD Insurance. Industry sources said the hull policy would cover rescue costs as well.
Brokers estimate the ship will have been insured for $ 100-140 million.
(Edited by Barbara Lewis)
Photograph: In this photo released by the Suez Canal Authority, a freighter, named Ever Given, sits with its bow stuck in the Suez shore on Wednesday, March 24, 2021, after being stuck through the Suez Canal in Egypt and blocked. all traffic in this vital waterway. Photo credit: Suez Canal Authority via UKTN.
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