Was this massive Suez Canal ship damages claim caused by a drone?

"The source is reliable"

Was this massive Suez Canal ship damages claim caused by a drone?


By Daniel Wood

An Australian based drone security expert says last year’s unprecedented blockage of the Suez Canal by a container ship, blamed at the time on a sandstorm, was likely caused by a drone attack.

The total insurance claim from the grounding of the Ever Given could reach well above US$1 billion, one of the most expensive ship damages claims in recent history. The six-day blockage threw global supply chains into disarray and, according to Lloyd’s List data, held up almost US$10 billion worth of trade.

“The source is reliable,” said Sydney-based Oleg Vornik (pictured above), CEO of counter drone technology firm DroneShield. “It came from somebody who is fairly plugged in.”

That person, said Vornik, is “pretty closely” connected to the European company that rescued the grounded Ever Given.

“With these things there is always a grey area, but I trust the source myself,” he said. “It’s one of our key in-country partners.”

Vornik said his company operates in about 100 countries and sells counter drone technology to government agencies and also intelligence and security businesses.

In March 2021, the 400 metre long Ever Given became wedged diagonally across the Suez Canal. The ship’s operator and Egyptian officials blamed strong winds and a sandstorm that led to engine and rudder failures. Investigations into the disaster were launched by the ship’s flag state, Panama, and also the ship’s insurer, the London headquartered mutual insurance association UK P&I Club.

Under maritime law, Panama must report its findings to the International Maritime Organization (IMO). Eighteen (18) months after the incident, the IMO’s media office told Insurance Business that there is no record of Panama’s investigation report being submitted.

Could the implications of a possible drone attack be complicating the investigation work?

“The version that we heard from our sources was that a drone landed on the control deck of the ship and hacked into networks and demanded, we don’t know the dollar amount of the ransom, but let’s say a million bucks in Bitcoin in the next 24 hours or we’re going to run the ship into the ground,” said Vornik. “The crew of the Ever Given did not comply and so they executed on their threat.”

One result of the ship’s grounding was a massive insurance claim.

The BBC has reported that the Suez Canal Authority (SCA) initially asked for more than US$900 million in compensation, including $300 million for a salvage bonus and $300 million for loss of reputation. UK P&I Club, the insurer of the ship’s owners, Shoei Kisen, for third-party liabilities, rejected that claim and described it as “extraordinarily large” and “largely unsupported”.

When the SCA lowered its claim demand to US$550 million a settlement was agreed, the BBC reported. However, the final settlement has not been revealed.

“Drones are now increasingly used for cyberattacks, where a drone would land on a roof of a building and use proximity to hack into networks,” said Vornik. “I appreciate this may sound like a conspiracy theory, [but] if you have a large commercial ship in this kind of situation blocking the largest canal in the world due to some poor weather and poor skills from the crew it seems like a remarkable coincidence.”

Vornik said drone attacks on shipping “happen all the time”, especially in the Baltic Sea, likely due, he said, to the geographical proximity to Russia where some of these hackers originate from.

The incidents don’t get publicly reported, he said, because the companies involved don’t want the negative publicity.

Drone or not, the ongoing investigations into the grounding of the Ever Given face complex insurance implications.

“Potential claims scenarios are likely from a number of different areas,” said Régis Broudin, Allianz’s global head of marine claims in an article from late March 2021.

“Any damage caused to the vessel during the incident, such as to the bottom of the vessel or its propeller, for example, will be covered by hull and machinery (H&M) insurance,” he said.

H&M insurers, said Broudin, are also responsible for the costs of the salvage operation, including the freeing, refloating and towing of the vessel.

“The size of this claim will be dependent on the scale and length of the operation,” he said.

Broudin said there are also many possible scenarios for third party liabilities.

“Including, for example, any damage caused to infrastructure or claims for obstruction,” he said. UK P&I Club covers this area for Ever Given’s owners and, according to Broudin, are one of 13 mutual insurance groups globally.

“Liability claims may come from organizations such as the Suez Canal Authority for loss of revenues (and also potential damage to the canal), as well as from other vessels blocked in the area (business interruption/loss of hire, or claims for compensation of cargo delays),” he said.

Broudin said the cargo on the container ship is insured separately, but, at the time of writing, he didn’t expect significant claims because initial reports suggested no significant physical damage to the ship’s cargo.

“However, there is the potential for cargo claims resulting from damage caused to perishable goods from delays,” he said. 

The final total claims figure may not be known for years.

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