Boskalis: the go-to company when you ground your ship in the Suez Canal

If you have just wedged your skyscraper-sized container ship across the banks of the Suez Canal, who are you going to call?

In the shipping industry, the answer would normally be Boskalis, the Dutch dredging group that owns salvage specialists Smit.

Little known outside of the sector, the Suez rescue that captivated the world in the past week has shone a spotlight on a company that claims it does not seek or need publicity.

“From a professional point of view, it’s not a very special job, we’ve rescued a lot of container vessels of similar size,” Peter Berdowski, chief executive of Boskalis told the Financial Times just hours before the Ever Given’s bow broke free from the Suez Canal.

“This job wasn’t unique from a technical point of view. But it’s unique from a public exposure point of view.”

To understand why Berdowski seems relatively blasé about a rescue that at one stage threatened to sever one of the world’s most important trade arteries for weeks, it helps to know some of the jobs the company has worked on in the past.

Established in the Netherlands more than 110 years ago, Boskalis was involved in the series of dams and land reclamation plans known as the Zuiderzee Project that the low-lying country credits with largely ending sea flooding. In the 1990s, Boskalis executed land reclamation projects in Singapore and Hong Kong, including for the latter’s international airport.

It bought salvage specialists Smit in 2010, which earlier that decade had been involved in raising the Kursk, the Russian nuclear submarine that sank following an explosion in 2000. When the Costa Concordia cruise ship keeled over off Italy after hitting rocks in 2012, Smit was given the task of draining almost 2,400 tonnes of oil from its tanks.

“You have to realise that we have 40 to 50 salvage jobs every year and some are spectacular and some [the wider world] are less aware of,” said Berdowski.

“But we are always under pressure — sometimes you’re going to help a vessel that is on fire with crew still onboard. That’s real pressure.”

Shipping industry executives say Boskalis has built a reputation as a leader for tricky salvage jobs, thanks to its wide array of dredging equipment to heave up sand, and its experience of working in difficult regions across the world.

“It was no surprise they were called on,” said Andrew Gregory, director at Harmony Marine Shipbrokers. “That’s who you go to. They’re the big boys.”

But the company does face growing competition. Chinese competitors, often with state support, have been attempting to break into the niche salvage industry by taking on big wreck removal projects, sometimes at a loss, according to one maritime industry source.

To execute the Suez Canal rescue, Boskalis and Smit called on a number of heavy-duty tugboats to assist with pulling the Ever Given off the banks after days of dredging work.

But before the ship broke free on Monday, the company was also making plans for more aggressive action to free the ship’s bow, which Berdowski feared could remain badly stuck. They were rushing specialist floating pipelines to the site that could turn cutter dredgers into high-powered sand blasters before the ship broke free.

“We [thought] jetting would be key,” Berdowski said.

With the Ever Given freed, attention is now likely to shift to an area that is not always straightforward in salvage jobs: getting paid.

Berdowski said that “nine out of 10 times” fees for a salvage such as the Ever Given would ultimately be decided by what is known in the industry as a Lloyd’s Open Form (LOF) contract, a type of semi-arbitration where the final amount is agreed based on a percentage of the value of the rescued vessel and its cargo.

“Both the insurer, the owner and us feel that at this moment in time it is not our main worry. We will work that out,” Berdowski said on Monday.

The ship’s Japanese owner, Shoei Kisen Kaisha, denied to the FT that a LOF had been used, despite industry publication Lloyd’s List last week reporting one had been signed with Boskalis and Japan’s Nippon Salvage.

While Berdowski declined to discuss the specifics of the Ever Given arrangement, shipping industry executives estimate that the rescue could net the company between $25m and $50m.

Gregory at Harmony Marine said that the LOF system “guarantees the problem gets fixed and the salvagers go hell for leather”.

“The alternative is lengthy, protracted negotiations that never work in multimillion-dollar situations.”

Under a LOF, the salvor in the Suez Canal operation will probably receive up to 10 per cent of the value of the hull and cargo, which make up the so-called “salved fund”.

Estimates collected by the FT put the value of the hull at about $150m. Christopher Dunn, head of the marine practice at law firm Kennedys, estimated the cargo could be worth another $300m to $400m, though he stressed the numbers were highly uncertain.

“It could potentially be one of the largest, or the largest, salved fund of any container ship to date because of the sheer size of it,” he added. 

It can undoubtedly be lucrative work. In 2020, Smit had earnings before interest, tax, depreciation and amortisation of €50m, making up roughly an eighth of Boskalis’s total ebitda. Boskalis had revenues of €2.5bn last year.

Berdowski conceded that the rescue of the Ever Given was likely to be good for the company’s wider reputation, but he argued it did not need the publicity.

“Reputation is good for Coca-Cola,” he said. “Let’s say our clients know us already.”

Additional reporting by Ian Smith in London and Kana Inagaki in Tokyo