The Ever Given is no longer blocking the Suez Canal, but the crisis is far from over for businesses that have been forced to endure months of legal battles in the hopes of recovering goods worth hundreds of millions of dollars that have been stuck on the impounded container ship.
IKEA (IKEA) and Lenovo (LNVGF) are two of the companies whose products are stuck on the Japanese-owned ship that blocked the Suez Canal for six days in March. Smaller businesses, such as Pearson 1860, a British bicycle manufacturer, and Snuggy UK, a maker of wearable blankets, are also facing delays.
“We don’t hold out much hope of seeing our stock this year and although it is insured in transit, we have guessed there will be little chance of seeing a settlement for months if not years,” Will Pearson, director of Pearson 1860, told CNN Business. On the ship, his company has products worth more than $100,000.
After the Suez Canal Authority filed an initial $916 million compensation claim against Japanese shipowner Shoei Kisen Kaisha for damages and losses incurred when the ship ran aground in a narrow section of the canal, blocking traffic, an Egyptian court impounded the Ever Given and its 18,300 cargo containers.
During the legal battle, the Ever Given — and its cargo — are being held in the canal’s Great Bitter Lake.
Several companies with Ever Given products told CNN Business that they have been kept in the dark about the status of their products while legal proceedings are ongoing and that they have been excluded from negotiations surrounding their release. Even if a settlement is reached, the companies or their insurers will almost certainly be responsible for a portion of the settlement.
The companies could be compelled to pay under a maritime law principle known as “general average,” which requires all parties involved in a voyage to share costs proportionally in the event of a loss. The principle has its origins in maritime trade regulations established by the people of Rhodes over a millennium ago in what is now Greece.
“If someone [in this case, the ship owners] incurs an extraordinary expense for the common good, then everyone is expected to contribute,” said Jai Sharma, the head of the cargo casualty at Clyde & Co., a law firm that represents companies and insurers with cargo worth more than $100 million on the Ever Given. The total value of goods on board is estimated to be between $600 million and $700 million, according to the firm.
Shoei Kisen Kaisha did not respond to a request for comment for this story. Multiple requests for comment to the Suez Canal Authority went unanswered.
IKEA told CNN Business that the ship is carrying a variety of products, but declined to provide any additional details about the shipment. Lenovo confirmed that it has cargo on the ship and that it is “exploring ways to recover the goods,” according to a spokesperson.
The stakes are even higher for businesses like EasyEquipment, a small UK company that lacks marine insurance on $100,000 worth of commercial refrigerators that were supposed to be delivered to restaurants before the coronavirus restrictions were lifted in May.
“Not only have we lost all profits from this crucial order, but this has also affected restaurant businesses that were hoping to reopen their doors after lockdown,” said CEO Michael Shah. “We’re caught in this limbo, and I know I’m going to have to foot this added [general average] bill to get my stock back.”
Pearson 1860 said it has received few updates regarding legal negotiations and the status of its shipment from canal authorities, Shoei Kisen Kaisha or Evergreen, which operates the vessel.
“There seems to be an ongoing shifting of blame and insurance wrangling taking place between the ship owners, Evergreen and the Suez Canal authorities,” said Pearson.
That sentiment was echoed by Snuggy, a small UK business that was founded just two years ago. Co-founder Jack Griffiths said over $550,000 worth of its best-selling product, a hooded wearable blanket, are on the ship. The business makes just two large orders per year, and this one was meant to see them through to the start of winter.
Griffiths said the delay is causing major cash flow issues for the business.
“We haven’t been informed of anything, we are completely powerless and left in the dark. I wish we were involved or even kept in the loop a little bit more, but we aren’t. It’s really not a great position to be in and it’s a hurdle most new businesses will struggle to get over,” he said.