Back in February the giant container ship Ever Given wedged itself across the Suez Canal, knocked off course by strong winds, blocking over 400 vessels from navigating one of the world’s main trade routes, the shortest sea-link between Asia and Europe.
Whilst it was freed after a week, and the other vessels eventually were allowed through, with the tailbacks at the northern and southern entrances to the canal cleared by early April, the Ever Given was seized. Claims for compensation were made, to recoup costs of repairing the ship, fixing the canal, and reimbursing shippers for disruptions from the ship’s owners and insurers.
The Suez Canal Authority (SCA) announced that a final deal had been reached, without disclosing the amount of compensation to be paid. Egypt had initially demanded $916 million in compensation before lowering it to around $550 million, but the final amount has been the subject of protracted negotiations and apparently includes a tugboat as part of the deal!
Further litigation against the ship’s owners from individual cargo owners will follow, with a stay issued by London court for two months before legal proceedings can commence. Given the owners position of non liability these claims will be lengthy and costly to resolve.
Ever Given was released on 7 July and has continued its journey, with the containers still on board, and is due to dock eventually in Felixstowe. The total goods value is estimated at circa. $775m in around 18,000 containers, undeniably a lot tied up in one containership!
These goods/materials which will be destined for a variety of industries and uses: Raw materials for production lines; parts for production lines; wholesale and retail goods; with many for the Spring/Summer season, which is now more or less over, and Autumn winter stock now due in from end of August.
These goods will have been paid for either before shipment or whilst on the water, so the importers have carried the costs for at least 6 months. Those with just in time stocking may have replaced these with further orders to ensure continued production; those reliant on selling these goods will be looking ahead for the next seasons; with winter/Christmas orders already placed, on the water and arriving soon. Some will be looking at Spring Summer 2022 and may hold off orders and will now have to decide either to store the goods arriving in warehouses until next season or discount now to sell and recoup some cash.
All of this impacts on cashflow compounded by the impact of COVID and margins being squeezed due to the increased transportation costs that are still holding at the high levels seen over the last 12 months.
Are working capital or trade facilities appropriate; do they have the flexibility to meet these changes and the impacts; do you need to review facilities?
There are many options to funding International trade and we can help review a businesses trade cycle and funding requirements to find the right solutions for them.
by Diane Davies,
Senior Commercial Manager
at Snowball Group
t: 07735 495068