Navigating the Risks: How the Ever Given Incident Exposes Global Supply Chain Vulnerabilities

The Ever Given Incident: A Wake-Up Call for the Maritime Industry

The grounding of the Ever Given in the Suez Canal in March 2021 was a stark reminder of the vulnerabilities in the global maritime supply chain. The incident, which halted 10% of global trade for a week, underscored the need for insurers to reassess their risk management strategies. According to a Risk & Insurance Group (RIG) cover story, the trend toward larger container vessels, exacerbated by the COVID-19 pandemic, has made the industry more susceptible to such disruptions.

The Impact on Marine Insurance and Cargo Claims

From a marine insurance perspective, the Ever Given incident highlighted several critical issues. Gregory DL Morris, the author of the RIG article, discussed the potential for cargo spoilage, compromised maneuverability of megaships in high winds, and the increasing number of on-board fires. These factors, combined with challenges surrounding salvage and the lack of suitable repair facilities, necessitate a closer look at underwriting practices. Data from MDS Transmodal shows that average vessel capacity grew by 25% between 2014 and 2018, with ultra-large containerships accounting for 31% of total capacity in 2018.

Long-Term Consequences and Practical Advice

The resumption of traffic through the Suez Canal does not signal the end of the supply chain's woes. Terminals will continue to experience congestion, and the severe drop in vessel arrivals will exacerbate existing shortages of empty containers. Jens Roemer, chair of the Sea Transport Working Group of the International Federation of Freight Forwarders, warns of long-term consequences related to congestion, lead times, and predictability. To mitigate these risks, businesses should consider diversifying their supply chains, maintaining larger inventories, and investing in advanced risk management technologies.