Suez Canal blocked by huge ship stops billions of dollars in trade

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Suez Canal blocked by huge ship stops billions of dollars in trade


An excavator attempts to free the stranded container ship Ever Given, one of the world’s largest container ships, after it ran aground in the Suez Canal, Egypt, March 25, 2021.
Suez Canal Authority | Reuters
The huge container ship Ever Given has been stranded in the Suez Canal for three days, disrupting billions of dollars in trade as ships pile up at both ends of the waterway.
More than 150 ships are waiting to cross the 120-mile canal, according to estimates by research firm StoneX.

Images captured from MarineTraffic vessel tracking show the extent of the build-up.

A graphic from MarineTraffic showing vessel traffic stopped around the Suez Canal after the Ever Given vessel got stuck in the canal.
Source: MarineTraffic
A graphic from MarineTraffic showing vessel traffic stopped around the Suez Canal after the Ever Given vessel got stuck in the canal.

Source: MarineTraffic

The canal handles around 12% of maritime trade, which makes it an essential crossing point. Each day of blockage disrupts more than $ 9 billion in merchandise, according to the Associated Press, citing estimates from Lloyd’s List.

Research firm StoneX noted that 24 of the ships transport crude, 15 are refined product tankers and 16 are liquefied natural gas / liquefied petroleum gas carriers.

For ships waiting to cross the canal, the alternative options are limited.

“As the delays continue, shippers will have to address the unpleasant decision to turn around and head for the Cape of Good Hope or wait in the Red Sea and the Mediterranean,” the data company said on Kpler core products in a customer note.

Rerouting dramatically increases the duration of a trip, which translates into higher costs. Sailing from the Suez Canal to Amsterdam takes just over 13 days at 12 knots, compared to 41 days if you travel around the Cape of Good Hope to the southern tip of Africa.

The stranded container ship Ever Given, one of the largest container ships in the world, is seen after running aground in the Suez Canal, Egypt, March 25, 2021.

Suez Canal Authority | Reuters

“The event highlights the relative fragility of the water exchange system, especially for flows for which Suez Canal transits represent a higher percentage of the total volumes moved,” the company added.

The vessel got stuck horizontally in the waterway as a result of high winds. Several tugs were dispatched to the scene and a team from Smit Salvage was called in to help.

“Dredging operations to help refloat the vessel are continuing. In addition to the dredges already on site, a specialized suction hopper dredger has arrived on site, ”said Bernhard Schulte Shipmanagement, who is the technical director of the vessel. The firm said an early attempt to refloat the ship on Thursday failed and another attempt would be made later today.

The enormous freight transporter is over 1,300 feet long and approximately 193 feet wide. It weighs over 200,000 tonnes. One end of the ship was stuck in one side of the canal and the other extended almost to the other side.

Nearly 19,000 ships crossed the canal in 2020, for an average of 51.5 per day, according to the Suez Canal Authority. The ship was sailing from China to Rotterdam when it ran aground.

Lt. Gen. Ossama Rabei, center, head of the Suez Canal Authority, with a team on foot along the shore of the Suez Canal where the Ever Given, a Panamanian-flagged freighter, got stuck at through the Suez Canal and blocks traffic in the vital waterway. An operation is underway to try to free the ship, which put global shipping at risk on Thursday again as at least 150 other ships slated to cross the crucial waterway are idling while waiting for the obstacle to clear.

Suez Canal Authority | AP

Oil prices jumped about 6% on Wednesday, with West Texas Intermediate crude futures and Brent futures posting their best day since November. But on Thursday, contracts were back in the red due to demand issues amid lockdowns in Europe.

The blockage of the channel is exacerbating supply chains that were already strained amid the disruption caused by Covid-19.

“While it is premature to assess any impacts resulting from the incident, our channel checks indicate that in the short term, the blockage is likely to add to industry supply tensions, which are already hampered by continued supply chain bottlenecks (Port and Ship Congestion / Container Shortage) caused by COVID-19 as liners redirect current trips to alternative routes, resulting in longer travel times longer and additional delays, ”JPMorgan wrote in a note to customers.

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