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Baltimore Sun: After 35 Days Stuck in the Chesapeake Bay, the Ever Forward’s Hull Is in ‘Good’ Condition. What’s Next?

Source: Hayes Gardner, The Baltimore Sun

Around 11 p.m. March 13, the Ever Forward did not turn with the Craighill Channel as it should have. It exited the channel at 13 knots, entered shallow water and quickly became stuck in the bay bottom.

The grounding took about 90 seconds; the fallout could take years.

After spending 35 days stuck in the muck of the Chesapeake Bay, the Ever Forward, a 1,096-foot, 131,420-ton cargo ship, was refloated Sunday morning and towed to an anchorage near Annapolis, where divers assessed the hull for damage Monday.

Had the ship rubbed against rock, there might have been significant damage; however, all the ship has to show for its lengthy stay at the bottom of the bay is 2 millimeters of caked on mud and some paint scrapes.

It was tugged Sunday morning, rather than propelled under its own power, as a precautionary measure, but officials said the ship has no structural damage and it will travel soon to the Port of Baltimore to pick up the 500 containers that were removed as part of the salvage operation. It will then resume its original voyage to Norfolk, Virginia, in the coming days.

“The condition of the vessel is good,” U.S. Coast Guard Cmdr. Baxter Smoak said Tuesday evening. “We’re lucky it grounded in soft mud.”

Though the Ever Forward will soon return to its regularly scheduled shipping route, it’s left uncertainty in its wake. If the cast of characters in the opening chapters were clamshell dredges, tugboats and now divers, the next episodes will feature investigators determining what happened and attorneys disputing responsibility and costs.

The salvage company, Donjon-SMIT, enlisted the necessary but expensive help of dredges, cranes for container removal, the dive team and much more as part of the salvage process, and it will be compensated for its work — likely tens of millions of dollars — by the shipping company Evergreen Marine Corp. The state of Maryland also is requesting money from Evergreen, to the tune of $100 million, for a “Responsibility Fund” that reimburses and compensates “relevant parties.”

But, in turn, Evergreen is seeking payment, likely more than half of the salvage cost, from the owners and insurers of the cargo in nearly 5,000 containers aboard the ship at the time of the grounding.

At the crux of it all is the essential question: Whose fault is it that the ship ran aground?

The Coast Guard, which is investigating the reason for the grounding, told The Baltimore Sun that it will probably be three to six months before its findings are released. And although the physical ship is in good condition, the next steps, especially when it comes to responsibility and cost, are uncertain, complex and prolonged.

“You’re dealing with a Taiwanese company with a Hong Kong-flagged vessel in U.S. waters with international companies having cargo on board,” said Sal Mercogliano, a professor of maritime history at Campbell University. “It gets to be just a mess.”

A complex cost

Evergreen, the Taiwanese shipping company, owns the Ever Forward, which sails under the Hong Kong flag, but that doesn’t mean the final cost of the salvage operation will fall squarely on the company’s shoulders.

After two failed refloating attempts in late March, Evergreen declared General Average, a standard of maritime law that requires all stakeholders in sea cargo, including the cargo owners, share in the cost of emergency salvage operations.

The amount each party pays is pro-rated by value, and because cargo is typically more valuable than the ship itself, oftentimes a ship owner pays less than half of the salvage cost.

So, though Evergreen will initially pay Donjon-SMIT, the salvor, for the full cost of the salvage, Evergreen will seek compensation from the hundreds, if not thousands, of cargo owners.

As long as those cargo owners or their insurance companies pay a security deposit or bond — a concept similar to collateral — they will receive their cargo promptly. General Average adjusters (a third party appointed by the ship owner) then determine how much each party owes, and attorneys who represent the cargo owners may negotiate that figure with the ship owner.

“The actual battle wouldn’t be finished for a year or two or three, but the purpose of providing guarantees or cash deposits is that you get your cargo first, and you argue later,” said Jai Sharma, the head of marine cargo casualty practice at Clyde & Co., a London-based law firm that represents some of the insurance companies with cargo on the Ever Forward.

If cargo interests, however, can prove that the vessel was unseaworthy — that is, there was a mechanical failure, or an incompetent crew, among other reasons — the claims for General Average will fail, and cargo owners will not have to pay. In that scenario, Evergreen will be required to pay for the salvage.

Such disputes can take years to resolve. The battle over financial responsibility for the salvage of the Ever Given, which grounded in the Suez Canal over a year ago, is ongoing, and a General Average case from 2011 wasn’t resolved until being heard this past November by the Supreme Court in London.

‘A mixture of anything and everything’

If cargo owners are, in fact, responsible for a portion of the salvage, not all containers will owe equally. Each party’s contribution is based upon the value of its cargo.

“You could have 30 containers full of sand, and it’s not worth a lot,” Mercogliano said, “but if you have one container full of microchips, man, you’re gonna pay.”

Some containers are full of furniture and clothes — like a Bloomberg reporter moving her apartment from Hong Kong to New York — and at least one carries 10,000 books belonging to Los Angeles-based graphic novelist Jordan Crane. Many others are from commercial businesses.

“On this ship, there will be a mixture of anything and everything,” said Sharma, noting the goods could range from textiles to cars.

And although there were “no known fuel releases or pollution events,” per the Maryland Department of the Environment, the environmental impact has yet to be fully evaluated. In his letter to Evergreen requesting the $100 million fund, Maryland Comptroller Peter Franchot wrote that “the incident has caused … environmental damage to the Chesapeake Bay” and that the ship “getting stuck in our waters undoubtedly has resulted in disruptions to the Bay’s fragile ecosystem.”

The emergency wetlands license issued by Maryland requires Donjon-SMIT, the salvor, to assess and develop a plan for any impacts to a natural oyster bar in the area of the grounding.

Franchot noted that the extensive dredging — 206,280 cubic yards, per MDE — could have damaged those oyster beds or disrupted spawning season for species that are harvested by the seafood industry, which could create an economic challenge.

Such ripple effects will continue. Although more than 80% of international goods travel by sea, Sharma pointed out that the supply chain is “fragile.”

On a small scale, for example, Crane, the graphic novelist, may have to delay his book tour. On the large scale, massive companies may not be able to sell goods at the expected time. Perhaps merchandise aboard the ship is seasonal, or maybe the delay has stalled the assembly of another product. That could lead to lengthy disputes, lawsuits and finger-pointing as to who is responsible.

“The consequences of an error,” Sharma said, “can be high.”

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