The build-up of stuck vessels following the Francis Scott Key Bridge collapse will likely give rise to substantial cargo claims, according to Nick Evans, Insurwave’s Head of Product.
Image source: EPA
For those in need of a refresher, on March 26th 2024, the container ship “Dali” reportedly lost power before passing under the major bridge near the Port of Baltimore, Maryland, which caused the vessel to sail uncontrolled into a pillar, resulting in a major collapse.
As per Insurwave’s Evans, some of the vessels currently still stuck on either side of the collapsed bridge are quite large and will need to wait until there’s a totally clear passage through the harbour.
“For context, it’s common for even a large ship to remain in port for as little as six hours, with turnaround times especially important if the vessel is carrying perishables, like grain or other foodstuffs,” he explained.
However, the stuck vessels in this instance are said to have already been there for three weeks. Evans noted that cargo on board may spoil after a given period, which could have a knock-on effect on future itineraries.
“This will likely give rise to substantial cargo claims – because receivers will potentially reject shipments, even if they’ve not technically spoiled, due to late delivery,” he said.
Evans continued, “It’s likely we will see a very high number of cargo claims resulting from this, particularly given the majority of the vessels are bulk carriers.”
He also observed that there are some vehicle carriers where customers may have clauses for timely delivery, however, there are very few container vessels impacted. Evans explained that this could in part be to do with itineraries being adjusted to simply skip Baltimore, as they will typically be calling at a lot of ports in the area, so the impact will be limited.
In related news, S&P Global Ratings recently reported that although the Francis Scott Key Bridge collapse in Baltimore could cause the largest marine insurance losses recorded since Costa Concordia in 2012, it will be a manageable earnings event for the global reinsurance sector.
The ratings agency stated that if the International Group of P&I Clubs reinsurance program is triggered, the reinsurance industry could face a maximum loss of $3 billion, with further losses possible via business interruption and other liability claims from the event.
“Although we view the collapse of the Francis Scott Key Bridge as a major marine loss, we anticipate that global reinsurers will be able to manage a loss of this magnitude,” S&P said.
