b'8American Journal of Transportation ajot.comGlobal maritime choke points (FIXcontinued from page 4) a U.S. credit rating agency, covering oilindustry.Somecontractsincludeproperty damage, liability, and busi-ageneralcatch-allforcemajeureness losses. How vulnerable is global maritime commercemaybeprovisionaddingotherunforeseeableMuch has been made of boosting more than we think. events beyond the parties reasonablesupply chain resiliency over the last control, he explained. If a pandemicyear, as companies came to grips with By George Lauriat, AJOTisnotspecificallylistedasaforcethe notion that they must be prepared majeure event in a contract, courts willfor the unforeseen if they are to suc-On March 23rd when the 20,000the Suez is critical to that end. determine if the financial chaos causedceed. Reliance on the legal doctrine TEUEverGivenranagroundandBut the Suez isnt the only mari- by the pandemic was unforeseeable atof force majeure may be a last ditch wedged itself across the Suez Canal,time choke point, in fact there are eightthe time the parties entered into theireffort to stem losses, but its not a plan all traffic through the critical waterwayprimarymaritimechokepointsandcontract and whether it caused suffi- for the future. Its also questionable came to a standstill. It was aground indozensofsecondaryones(seemapcient disruption of the parties abilitywhether incidents represented by the the Canal for a mere six days but theonnextpage).Theprimoeight(into perform their contract. Ever Given and COVID-19 may any cascading impact on the global supplyAJOTs estimation) arethe Panamalonger be considered unforeseen.chain is still being felt weeks later.Canal,theStraitofGibraltar,Capeg oingF orward Maritime and commercial insurers Itsunderstandable.TheSuezof Good Hope, Bosporus Strait, SuezSomesupplycontractsincludehave already recognized the increased Canal averages over 90 vessel transitsCanal, Bab-el-Mandeb Strait, Strait ofnaturaldisastersasforcemajeurerisks inherent in operating ultra-large a day nominally linking the Mediter- Hormuz and Straits of Malacca. events. A recent case in a federal courtvessels. There is disproportionately ranean Sea to the Red Sea. But in real- The two canals, Panama and Suezin New York provided cover for thosegreater cost when things go wrong, ity, the Suez ties Asia to Europe. Thehave both become essential to the flowseeking to claim COVID-19 as forcenotedRahulKhanna,globalhead 120-mile long waterway saves aroundof containerized freight. In the case ofmajeure, when it stated that by anyofmarineriskconsultingat Allianz 6,100 miles of transit using London,the Panama Canal, the expansion hasmeasure,theCOVID-19pandemicGlobal Corporate & Specialty. Insur-UKMumbai,IndiaastwobasemadeitcrucialastheTrans-Pacificfitsthosedefinitions.Thedecision,ers have been warning for years that points. The difference is roughly 26direct call connector to the U.S Gulfaccording to Schaps, opens a path forthe increasing size of vessels is lead-days to 44 in sea time.and East Coast ports.parties to make force majeure claimsing to a higher accumulation of risk.More to the point, when it comesIn combination with the Suez, thisor defenses, when the contract clauseThose fears are now being realized tomovinggoodstoandfromAsiaenablescarrierstoruninterlinkingidentifiesnaturaldisastersasaforcein more frequent reports of large ships toEurope,althoughitcomesataglobal loops that link Asia to Northmajeure event, even if the clause omitsencounteringdifficultiesnavigating premium,theSuezCanalisreallyAmericafrombothEastandWest.references to pandemics or diseases. canals,accordingtoJonathanMoss, theonlywaytogo. ThealternativeWhich brings us to the point of vul- Goingforward,supplychainhead of marine and trade at DWF, a isgoingaroundtheCapeofGoodnerabilities. If the Panama Canal hadstakeholders,fromshippersandprovider of legal and business services. Hope,whichisnotonlylongerbutalsobeencompromisedatthesamereceivers to carriers, third parties, andOperating the floating behemoths also would omit the port opportunities oftimeastheSuez,whatwouldtheinsurers, must face the bigger ques- requireshugeinvestment,hesaid, the Mediterraneanin short, the longdamage be to the global supply chain? tionofhowtheyaregoingtoreactfor associated infrastructure such as haul is bad business. At various timesOfcourse,themajorityoftheto future disruptions of the kind wit- deeper channels and larger cranes and inthepast,tankershaveavoidedchoke points are straits which arenessed in recent weeks and months.storage facilities. using the 120 mile waterway to saveless vulnerable to calamities like mal- The Ever Given incident, for example,Insurance companies know what cash on canal fees, but the rotations offunctioning locks or vessel groundingsis likely to cause losses for insurers onto do when risk goes up: they increase boxships obviates this rationale. Con- but the risk factor is still significant inthe order of hundreds of millions ofinsurancepremiums,andthecosts tainerships are tied to their loops and(CHOKEcontinued on page 9) dollars,accordingtoFitchRatings,(FIXcontinued on page 12)Making Farmto Fork a RealityIts not just the boxits our approach to offering innovative equipment fleet solutions bundled with leading edge technology that makes the difference.Visit www.SeaCubeContainers.com to learn more.BSYA-SeaCube AJOT Half Page 10x8 version B.indd 1 12/7/20 3:36 PM'