Egypt could ask for up to $1 billion in compensation for Ever Given crisis
Come take a look at our article to learn more about the impact of the Ever Given Crisis on Egypt and Egypt's decision to seek compensation for the damages.
On March 23rd, 2021, the container ship Ever Given clogged the Suez Canal, crippling global shipping. Significant technical and human resources were thus mobilized to move the ship and clear the canal for the resumption of traffic for nearly a week. On March 29th, it finally refloated and resumed its journey, but it took another three more days for traffic to normalize in the area.
This incident had significant repercussions on both world trade and the Egyptian economy. 422 ships, loaded with 26 million tons of goods, were stranded in this busy area. According to the Suez Canal Authority, in 2020, nearly 19,000 ships passed through the canal, an average of 51.5 per day. This is why Egypt initially decided to demand $900 million in compensation. In April, the Suez Canal Authority stated in a televised speech that it had already begun negotiations to obtain compensation for the damage caused by the Ever Given ship and that Egypt was not at fault and that the ship was entirely to blame for what occurred.
As a reminder, the Suez Canal is a 193-kilometer-long waterway that connects the Mediterranean Sea to the Red Sea and is the quickest sea route from Europe to Asia. It allows ships to go from Asia to Europe without having to get around Africa. Every day, roughly $9.6 billion passes through the Suez Canal, while 75% of these goods come from China. This canal thus represents around 10% of the world's freight transport. It is therefore understandable that blocking such a strategic point is economically disastrous for Egypt. According to insurance company Allianz, each day that the canal was immobilized, it cost world trade between $6 billion and $10 billion. For every hour of blockage, $ 400 million was blown away. In addition to the economic repercussions, the crisis has also highlighted the great dependence of international merchandise trade on maritime routes, backing up companies that prefer rail transport of goods between Europe and Asia over sea freight.
After weeks of negotiations, given the estimated value of the goods transported by the Ever Given, Egypt announced on May 23rd that it will lower its requested amount from $900 million to around $550 million.
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