Ruminations: Suez Canal Salvage Rescue

"From a professional point of view, it's not a very special job, we've rescued a lot of container vessels of similar size."
"This job wasn't unique from a technical point of view. But it's unique from a public exposure point of view."
"You have to realize that we have 40 to 50 salvage jobs every year and some are spectacular and some [the wider world] are less aware of."
"But we are always under pressure -- sometimes you're going to help a vessel that is on fire with crew still onboard. That's real pressure."
"Both the insurer, the owner and us feel that at this moment in time it is not our main worry [final amount to be paid for the salvage operation]. We will work that out."
Peter Berdowski, chief executive, Boskalis dredging group

The stuck container vessel forced some ships to take a longer route around the Cape of Good Hope at Africa's southern tip. (Mohamed Abd El Ghany/Reuters)

The Dutch dredging group Boskalis, owner of the salvage specialist Smit, is known across the width and breadth of the shipping industry as the experts to bring in when trouble occurs on the high seas. It went to work with confidence, viewing the Ever Given's bow stuck in the Suez Canal -- when the enormous cargo ship virtually steered itself while in a windblown dust storm straight across the banks on either side of the Canal, firmly wedging itself and holding up seagoing traffic anxious to take passage through the Canal to meet shipping deadlines -- as a routine job.

There was a point during the close-to-a-week standstill with hundreds of vessels piling up awaiting passage, when it appeared that one of the world's most vital trade arteries would force ships to take a much longer, more expensive and time-consuming route through the Horn of Africa with all its attendant dangers of piracy and crew abduction awaiting rescue through the blackmail of violence-prone predators of the high seas.

Boskalis has been in business for over 110 years since it was established in the Netherlands. It was heavily involved in the construction of a series of dams and land reclamation projects known collectively as the Zuiderzee Project, undertaken to prevent the low-lying country from the slow creep of its vulnerable land base being overwhelmed by the encroaching sea. With its inauguration the Low Country saw an end to the always-threatening flooding that continually overwhelmed its security.

Land reclamation projects were undertaken by Boskalis in the 1990s in Singapore and Hong Kong. In Hong Kong, it is where its international airport now sits. Salvage specialist Smit was bought by Boskalis in 2010, and its reputation included the raising of the Russian nuclear submarine Kursk which sank in the Barents Sea after catastrophic explosions aboard in 2000, with horrendous loss of life; of the crew of 118 seamen, none survived.

The Kursk, one of Russia's largest and most advanced submarines, which exploded and sank during naval maneuvers in August 2000, heaves ahead in the Barents Sea near Severomorsk in 1999.

Photo: AP

Boskalis is renowned throughout the shipping industry for its reputation as an elite leader in tricky salvage operations, reflecting its wide array of dredging equipment, capable of heaving up vast tons of sand, and its experience in working through difficult geographic regions globally. "It was no surprise they were called on. That's who you go to. They're the big boys", commented the director of operations at Harmony Marine Shipbrokers.

There is growing competition for the work and the title that Boskalis basks in. With state support, Chinese competitors are focused on breaking into the niche salvage industry. They are willing to take on large wreck removal projects, and to do so at a loss, according to shipping industry sources. It is a reflection of how China became the world's premier production headquarters; a formula that served Beijing well, producing commodities with cheap labour and flooding the world with products at a price that first-world manufacturers couldn't compete with.

Passage through the Canal has now returned to normal, no more backlog of over 300 ships awaiting the 10- to 12-hour passage to enable them to get on with their deliveries schedule. Now the matter at hand is paying for the salvage job. Fees for salvage of this nature normally is calculated through a Lloyd's Open Form contact, similar to semi-arbitration where the final amount to be paid is agreed upon by both parties based on a percentage of the value of the rescued vessel and its cargo.

The Japanese owner of the ship, Shoei Kisen Kaisha chose not to divulge whether a Lloyd's Open Form contract was arranged. The estimate in the industry speculating over the final total is that the rescue could net the company anywhere between $25 million and $50 million for a job well done. According to Harmony Marine, the LOF system "guarantees the problem gets fixed and the salvagers go hell for leather. The alternative is lengthy, protracted negotiations that never work in multimillion-dollar situations."

Christopher Dunn, head of marine practise at law firm Kennedys, felt the cargo could be valued at an estimated $300 million to $400 million, while the value of the ship's hull (repairs) would be about $150 million. "It could potentially be one of the largest, or the largest, salved fund of any container ship to date because of the sheer size of it", he explained.