It once blocked the Suez Canal is about to “leave the bitter lake”
On the evening of June 23, the Egyptian Suez Canal Authority (SCA) issued an announcement stating that it had reached a “preliminary agreement” with the owner of the “Nagai” freighter that blocked the canal channel, which meant that it had been detained. The month-long “Long Gift” round is expected to “freeze from the bitter lake.”
The “Long Gift” Wheel of the Suffering Lake
On March 23, while trying to pass the Suez Canal from south to north, the freighter “Changci” ran aground on the one-way channel closer to the south exit, thus blocking the so-called “global shipping throat” canal for 6 days. as long as.
During these six days, at least 422 cargo ships, large and small, were blocked near the entrances on the north and south sides of the canal. Even if the canal was reopened after six days, they still took nearly a week to pass. Some of the ships on the way were forced to move around the Cape of Good Hope.
These 422 ships, large and small, carried 26 million tons of various goods, including many perishable products. The long blockages and delays caused heavy losses to global carriers, shippers and merchants. Not only that, the stranding of a freighter in a mere mere mile caused a paralysis of nearly 10% of the global maritime transport logistics. SCA said that during the six days of closing the channel, Egypt alone lost as much as 12-15 million US dollars per day.
At the same time as the global flow of people and logistics caused by the new crown epidemic, the sudden change of the Suez Canal has made the shipping industry worse, causing the global cost of goods to rise rapidly. All of this is borne by large and small businesses around the world and hundreds of millions of ordinary consumers.
For this reason, since the “Changci” freighter was towed out of the ground, it was forcibly detained by the Egyptian authorities in Bitter Lake, the largest lake in the Suez Canal. They were detained together, as well as all 22 crew members on board. All goods.
SCA filed a huge claim of US$916 million at the end of March, including the direct economic losses caused to Egypt by the blockage of the Suez Canal, and the 600 workers mobilized by Egypt to rescue the cargo ship “Longci” 24 hours a day for 6 consecutive days. “Overtime” costs for lost work and maintenance costs for machinery and facilities.
▲”An Egyptian court approved the seizure of the “Changci” freighter, and the chairman of the Suez Canal Authority demanded compensation. Video source: Our video from the Beijing News.
Difficult negotiations, unknown solutions
The shipowners initially appeared extremely reluctant. They accused the pilots sent by SCA of being “irresponsible” and “dereliction of duty,” and pointed out that the pilots who should have been in position throughout the canal crossing “existed the fact that they were distracted.”
SCA retorted, saying that the captain of the “Changci” freighter was “too amateurish” and committed “common sense errors in navigation” and was “mainly responsible” for the shipping disaster.
From April to May, Zhengrong Steamboat gritted his teeth and sold $150 million in an attempt to end the matter at a low price. In this regard, the Rabbi, the head of SCA, described the farce as “ridiculous” at the end of May.
However, it is not good for anyone to delay.
In terms of SCA, although the canal has been reopened, the impact of the epidemic is still severe. The “traffic congestion” of the canal has caused immeasurable losses to the reputation and credibility of this golden waterway. Some shipping companies that pass through the Suez Canal all the year round are seriously considering changing some routes to the Cape of Good Hope. They would rather increase costs and time-consuming, but also avoid the troubles of similar incidents.
In any case, a mere boat can block the canal for 6 days, and the canal channel has just undergone a large-scale reconstruction, no matter how excuses it is, people’s doubts cannot be eliminated. If the lawsuit of the “Changci” freighter continues to drag on, the loss of SCA’s credibility will continue, and it will continue to cause greater economic losses to Egypt.
This is especially true for shipowners. At present, international shipping has “one price per day”, and rare goods are available, but the “Evergreen Series” is still plagued by the “Changci” freighter. Seeing that it is about to miss this rare opportunity to chase profits.
Not only that, the “Changci” freighter is a behemoth with a cargo capacity of more than 200,000 tons. If it has been trapped in the “bitter lake”, it will cause heavy direct economic losses, but it will also cause incalculable damage to the carrier’s goodwill. If it doesn’t, it will bring disaster to shipowners in the fiercely competitive international shipping industry.
▲The Egyptian presidential adviser said that the Suez Canal blocked the “Long Grant” should be fully responsible. Video source: Beijing News, our video.
Because of this, the two sides quarreled fiercely, tried their best to “sell hardship” and “show their muscles” in front of the cameras of the international media, while quietly trying to compromise. The asking price of SCA first dropped to 600 million U.S. dollars and then to 550 million U.S. dollars in early June, and the shipowner also hinted that it was “negotiable.”
The freighter “Changci” and the cargo on board are separately insured. A British insurance company called the “London Club” is reported to have paid part of the insurance premium to the shipowner, but it cannot represent the interests of all shippers. If it continues to drag on, it may become a global-scale “chain lawsuit” and a sum of money. Endless “confused accounts” that hurt both sides.
In this case, a company named StanMarine intervened in the negotiations as a joint agent of the shipowner and insurance company, and finally achieved a breakthrough.
On June 20, Becker, the lawyer of SCA Group, disclosed to the Egyptian court for the first time that “agreement is about to be reached”. On the evening of the 23rd, SCA, the British club, and Stan Marine’s business representative Pir Mohamed all confirmed the news. If there are no accidents, a formal agreement will be reached within 10 days, and the freighter “Changci” is expected to get rid of the “Bitter Lake” and escape.
So far, the parties have not officially disclosed the total amount of the “reconciliation money”. Perhaps, from this moment until the final agreement is announced, the two parties intend to “work hard” and try their best to “stop losses” for themselves.
However, the “obstruction” in the international shipping industry will not come to an end: the epidemic and the resulting series of disasters are still continuing and spreading. From shipowners, cargo owners to ordinary consumers, the hardships are far from over.
Reprint indicated source：Spark Global Limited information