Evergreen Stock Up 28% After Their Ship Blocked Suez Canal
Evergreen stock prices are soaring since the incident where their mega cargo ship blocked the Suez canal. Share prices of the Taiwanese transportation company gained 28% since March 23, the day the Ever Given ship got stuck in the Suez Canal. The grounding triggered an epic traffic jam of more than 400 ships which lasted for days.
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Suez Canal Incident | Evergreen Stock
The 1,300-foot cargo ship Ever Given made headlines last March 23 when a sudden sandstorm caused it to veer off course in the Suez Canal. The ship ran aground in the canal and remained stuck diagonally for six days. This brought widespread shipping traffic to the area, halting the flow of goods all over the world.
In the aftermath of its grounding, Engineers and sailors worked around the clock to dislodge the vessel. Finally, the Suez Canal crew managed to free the vessel last March 29 with the assistance of an unusually high spring tide.
Two weeks later, the Ever Given remains on a dock at the Great Bitter Lake in Egypt. Both ship and crew are held pending results of an investigation on what happened. Investigators are extracting data from the ship’s voyage data recorder to gather clues as to how the vessel ended up lodged in the Suez banks.
The probe focused on a sandstorm that occurred when the ship ran aground, which likely threw the vessel off course.
Evergreen Stock Climbed During The Incident
Evergreen’s stock continuously gained over the summer. However, the transport company reported significant surges during the canal blockage. On March 23, the day Ever Given ran aground, Evergreen’s stock fell by 8% and closed at NT$42.75.
Since then, stock prices rallied to NT$55. This is Evergreen’s highest price in over a year, sending its yearly gain to 440%.
According to Adam Scheiner, an analyst at UBS Global Wealth Management, volatility is standard for ocean freight stocks. Stocks tied to shipping rates, which usually fluctuate depending on voyages. Due to the pandemic, shipping rates have steadily risen.
Ever Given’s blockage made port congestion and demand for shipping even worse.”The blockage in the Suez Canal just poured gasoline on this demand and price fire,” Scheiner said.
Higher Shipping Rates
Prior to the Suez incident, Peter McNally of ThirdBridge said container shipping rates went up four times since the start of last year. He said a shortage of containers and difficulties dealing with the logistics of getting vessels in use back to Asia drove shipping rates higher throughout the year.
“This was the state of play before the Ever Given snarled global shipping traffic,” McNally noted. In addition, the pandemic slowed air traffic. This led more companies to turn to marine shipping to transport freight.
Evergreen Faces Fines For Suez Mishap
Meanwhile, the Ever Given’s crew remain in Egypt as they await the conclusion of the investigation. Egyptian authorities said they won’t release the cargo ship until its owners agreed to pay up to $1 billion in compensation. “The vessel will remain here until investigations are complete and compensation is paid,” said Lt. Gen. Osama Rabie.
The general leads the Suez Canal Authority. He said he hopes “for a speedy agreement,” adding that the “minute they agree to compensation, the vessel will be allowed to move.”
For the damages, Rabie said Egyptian authorities will demand $1 billion to cover the costs of freeing the vessel. The figure covers the expense of the equipment and machinery used to clear the way. Also, it covers the damage inflicted to the canal itself during the dredging to free the ship.
The money will also help compensate around 800 people who worked to release the 200,000-ton ship. In addition, the fine will refund the costs from the blocking of the canal. Estimates place the Egyptian authority’s loss in transit fees at $95 million due to Ever Given.
Watch the Bloomberg Markets and Finance report that stuck ship in Suez Canal holds up oil and LNG shipments:
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