In March, a massive cargo ship, the Ever Given, became stuck in the Suez Canal, blocking marine traffic for close to a week. This was an unusual and extreme event in shipping, but it provides some important lessons on the current state of the shipping industry and cargo insurance.
The Ever Given Incident
Calling the Ever Given massive might be an understatement. The cargo ship is nearly as long as Empire State Building is tall, and it can carry 20,000 containers. When it became stuck in the Suez Canal, it prevented other ships from passing. BBC reports that nearly 400 other ships became stuck as a result of the blockage, and CNBC reports that calculations from Lloyd’s List show that the blockage cost about $400 million an hour in trade. A significant portion of the world’s shipping traffic passes through the Suez Canal, so a blockage like this is a major disruption to the global supply chain.
Like the cargo ship itself, the resulting losses caused by this incident are massive. According to CNN, the vessel’s owner has been ordered to pay $900 million as compensation. Disagreement over the charges has resulted in the ship being seized.
Could It Happen Again?
With cargo ships getting larger and larger, it’s possible that this sort of incident could become a recurring problem.
According to NPR, there are more than 100 ships about the size of the Ever Given, and even bigger cargo ships are being built in Asia. And these ships don’t have to get stuck to cause major losses. Sometimes, rough seas and wind knock containers overboard. One ship lost more than 1,800 containers, worth about $200 million, during high winds.
What Lessons Can We Learn?
The Suez Canal incident serves as a grave reminder of the importance of good cargo insurance.
- You never know what will happen in global shipping.
- Even if you do everything right, you can be adversely affected by influences out of your control.
- The supply chain is fragile – the interruption of one shipment can have a ripple effect on countless others.
With these lessons in mind, find a commercial cargo shipping partner you can count on to provide robust coverage, affordable rates and collaborative, flexible problem solving. You’ll find all that and more with Relocation Insurance Group. Contact us to start a conversation.