Suez Canal blocked by massive ship brings billions in trade to a standstill

A dredger tries to free the stranded container ship Ever Given, one of the largest container ships in the world, after it ran aground on March 25, 2021 in Egypt’s Suez Canal.

Suez Canal Authority | Reuters

The massive container ship Ever Given has been stuck in the Suez Canal for three days, stopping billion-dollar trade as ships pile up at both ends of the waterway.

Research firm StoneX estimates that more than 150 ships are waiting to pass the 120-mile canal.

Images taken by the ship’s tracker MarineTraffic show the extent of the structure.

A graphic from MarineTraffic shows that shipping around the Suez Canal was stopped after the Ever Given ship was trapped in the canal.

Source: MarineTraffic

A graphic from MarineTraffic shows that shipping around the Suez Canal was stopped after the Ever Given ship was trapped in the canal.

Source: MarineTraffic

The canal handles around 12% of maritime trade and is therefore an essential transit point. According to The Associated Press, each day the blockade disrupts more than $ 9 billion worth of goods, citing estimates by Lloyd’s List.

Research firm StoneX found that 24 of the ships are carrying crude oil, 15 are tankers for refined products, and 16 are carriers of liquefied natural gas / liquefied gas products.

Alternative options are limited for ships waiting to pass through the canal.

“In view of the continuing delays, the shippers have to make the uncomfortable decision whether they should make a U-turn and go to the Cape of Good Hope or wait in the Red Sea and the Mediterranean,” said the raw materials data company Kpler in a message to customers.

The rerouting increases the length of a trip significantly, resulting in higher costs. Sailing from the Suez Canal to Amsterdam takes just over 13 days if you travel at 12 knots, compared to 41 days if you circumnavigate the Cape of Good Hope on the southern tip of Africa.

The stranded container ship Ever Given, one of the largest container ships in the world, was seen aground in Egypt’s Suez Canal on March 25, 2021.

Suez Canal Authority | Reuters

“The event highlights the relative fragility of the on-water trading system, particularly for those flows for which Suez Canal transits represent a higher percentage of the total volume moved,” added the company.

The ship was jammed horizontally in the waterway after strong winds. Several smugglers were sent to the scene and a team from Smit Salvage was brought in to help.

“The dredging work to support the floatation of the ship will continue. In addition to the dredgers already on site, a specialized suction dredger has arrived at the site,” said Bernhard Schulte Shipmanagement, the ship’s technical director. The company said an early attempt to get the ship afloat Thursday had been unsuccessful and another attempt would be made later that day.

The enormous carrier is over 1,300 feet long and approximately 193 feet wide. It weighs more than 200,000 tons. One end of the ship was wedged into one side of the canal and the other almost to the other bank.

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

Lieutenant General Ossama Rabei, center, head of the Suez Canal Authority, with a team walk along the banks of the Suez Canal, where the Ever Given, a cargo ship flying the Panama flag, was jammed across the Suez Canal, blocking traffic on the vital waterway. An operation is underway to try to free the ship, which further threatened global shipping Thursday as at least 150 other ships had to idle through the crucial waterway waiting for the obstruction to be removed.

Suez Canal Authority | AP

Oil prices rose about 6% on Wednesday, with West Texas Intermediate crude oil futures and Brent crude oil futures recording their best day since November. By Thursday, however, the contracts were back in the red due to demand concerns due to lockdowns in Europe.

Blocking the channel tightens supply chains, which were already strained due to the disruptions caused by Covid-19.

“While it is premature to fully assess the full impact of the incident, our sewer reviews indicate, in the short term, that the blockage will likely add to the industry’s supply burdens already from ongoing supply chain bottlenecks (port and ship / container congestion Bottlenecks) caused by COVID-19 as liners reroute current trips to alternative routes, resulting in longer journey times and further delays, “JPMorgan wrote in a notice to customers.

Planet Labs satellite image showing that shipping has stopped because the container ship Ever Given ran aground in the canal (top left).

Source: Planet Labs

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