In light of the Suez canal blockage, Siobahn Bahl examines the longer- term impacts of this six- day disruption.
The Suez Canal is one of the most critical passage ways in the world. It sees 10 per cent of all global shipping pass through it every day making up nearly 90 per cent of all global trade. It is a vital vein in the global network, but it is also one of the most precarious.
“The Ever Given has shown a bright light on the weakness of the global trade chain, and the power one accident can have on the world.”
The Suez Canal is the shortest sea link between Asia and Europe, and on 23 March 2021 ‘Ever Given’ a Ultra Large Container Vessel (ULCV), carrying 20,000 containers, the width of 194ft became lodged in the canal.
The Ever Given set off that morning at 5:17 am. A sandstorm whipping around the ship, 30mph winds battering against her sides, she set off for her voyage. It is questionable why she set off in the first place, after at least one other ship decided to hold off in the safety of the harbour.
Within 25 minutes the Ever Given had sped up to more than 13 knots and began by 5:42am to swing, pointing to starboard, to portside, to starboard, to portside again. It appeared to speed up as an attempt to correct itself, but it was too late, her bow had became wedged into the side of the canal.
For six days the Ever Given remained lodged in the middle of the Suez Canal. Re-floated in the early hours of the 29th March, her dislodging freed the blockaded 367 vessels and the tensions running through the world of maritime commerce. The Suez Canal took 10 years and 1.5 million workers to build in the 19th century, yet it took one day and one Ultra Vessel to bring it’s flowing traffic to a halt.
As you can imagine, such a gigantic vessel was not easily removed, precisely 200,000 metric tons had to be prised from the earthy clutches of the Asian embankment. It took sand dredging, rock removal and the reopening of an old Egyptian canal as a by lane to navigate the situation.
It was one ship, in one canal, but the cascading consequences are affecting ports and supply chains around the world.
The blockage in the canal has been estimated by shipping analysts to have held up nearly $10 billion in trade every day. The expenses don’t stop there, some shipowners added weeks of sea time, racking up fuel costs in re-routing around the Cape of Good Hope. This alone could be an add of more than £18,000 a day in fuel costs. The economic ramifications are not so much the issue for an industry that amounts to $18 trillion a year, but the blockage has thrown timings out the window. Many ships are now delayed in reaching their final destinations, throwing the whole maritime trading chain out of kilter.
Due to the contingent nature of the shipping trade the economic ripples are yet to be realised. It is only once we see the full knock on effect on the trading line will we be able to, with some clarity, see the consequential economic forecast. Yet data from German insurer Allianz predicated that the blockage will cost global trade between $6-10bn a week and reduce annual trade growth by 0.2-0.4 per cent points.
What is particularly disconcerting is the range of products that were stuck in this watery traffic jam. Boats with Ikea products, livestock, and more were caught up in the blockage. This is an issue that will effect a wide range of markets.
As Alan Murphy, the founder of Sea Intelligence, a maritime date and analysis firm told the New York Times “All global retail moves in containers, or 90 per cent of it. Name any brand name and they will [have] been stuck on one of those vessels”.
Time will tell, but for now the Ever Given has shown a bright light on the weakness of the global trade chain, and the power one accident can have on the world.