Thoughts Ever Given – Biggest Grade Average in History?

This was one of the points raised at the latest New York Maritime (NYMAR) event held virtually, which offered an informative collection of ideas blending legal, insurance and commercial realism of the Ever Given accident. Moderated by senior lawyer Keith Heard, the webinar covered what happened to the victim in late March, its immediate consequences, and the likely future consequences that could occur.

Opening speaker Jim Shirley, with first-hand rescue experience complemented by an extensive legal career, with Haight Gardner and then Holland & Knight, detailed the actual grounding on March 23 and the rescue activity that took follow-up that freed the ship six days later.

Related: Questions on the insurance ramifications of the blockade of the Suez Canal by Ever Given

Offering general comments, Skuld P&I Club New York representative Nikolai Ivanov gave an insurance-focused presentation, covering Hull & Machinery, P&I and Cargo insurance.

Ivanov referred to the 2004 oil tanker grounding in the Suez Canal and said: “Insurance problems have metastasized since then.” When considering the General Average (GA), which would be split between hull and cargo interests, he suggested that Never given would be: “the biggest GA victim in history”. He added: “With these container ships getting bigger and bigger, it’s causing huge headaches in the way freight claims and the overall average are going to be handled.”

P&I insurance could also come into play, certainly when delay claims are made against ship owners, but also regarding the “Salvage Bonus” – a big deal here. Maritime lawyers should be happy, Ivanov suggested: “You can see the ripple effect of all these claims; it’s a litigation that will probably put our grandchildren in college… It’s a soup of different interconnected claims, many of which are directed against P&I clubs.

One of NYMAR’s great strengths is its ability to integrate business considerations, and, here, it did not disappoint. Brian Nemeth, a logistics veteran working with Alix Partners estimated that while the grounding incident and subsequent delays of several hundred other vessels occurred over 11 days, “the ripple effects are taking place. still feel today… here we are three months later, it still has an extreme impact on international trade.

He cited record rates of container movement, congestion that has now reached northern European ports, with stopovers now cut, and historically low reliability of schedules as the latest shipping debacles followed Covid 19 disruptions from last year.

This time around, demand has exceeded supply, in contrast to the historical dynamics of excess supply; Nemeth said ship orders have now accelerated, with the backlog stretching to 2023. He spoke about how the cargo side is, briefly alluding to the rumored ship charter by Home Depot – not mentioned by name, referred to only as “one of America’s largest retailers”).

“People are getting creative with solutions to try to take control of their supply chains. But his end result to the audience at the end of his lengthy presentation was: “The disruption is here to stay.” “