Suez Canal blocked by large ship paralyzes billions in trade

A bulldozer tries to free the container ship Ever Dado, one of the largest container ships in the world, after stranding on the Suez Canal, Egypt, on March 25, 2021.

Suez Canal Authority | Reuters

The huge container ship Ever Given has now been stuck in the Suez Canal for three days, disrupting the billion dollar trade as ships pile up on both sides of the waterway.

More than 150 ships are currently waiting to pass the 120-mile artificial channel, according to estimates by research firm StoneX.

Images captured from the MarineTraffic vessel tracker show the extent of the accumulation.

A MarineTraffic chart showing disrupted vessel traffic around the Suez Canal after the Ever Given vessel got stuck in the canal.

Source: MarineTraffic

A MarineTraffic chart showing disrupted vessel traffic around the Suez Canal after the Ever Given vessel got stuck in the canal.

Source: MarineTraffic

The channel handles about 12% of the maritime trade, being an essential crossing point. Each additional day of ship delay hinders more than $ 9 billion worth of goods, according to the Associated Press, citing estimates from Lloyd’s List.

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

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

“As delays continue, hauliers will have to address the unpleasant decision to make a U-turn and head for the Cape of Good Hope or wait in the Red Sea and the Mediterranean,” wrote commodity data company Kpler in a statement. note to customers.

Redirecting significantly increases the duration of the trip, which translates into higher costs. The trip from the Suez Canal to Amsterdam takes just over 13 days when traveling at 12 knots, compared with 41 days when traveling around the Cape of Good Hope.

The stranded container ship Ever Dado, one of the largest container ships in the world, is seen after stranding, in the Suez Canal, Egypt, on March 25, 2021.

Suez Canal Authority | Reuters

“The event highlights the relative fragility of the water trading system, especially for those flows for which the Suez Canal transits represent a greater percentage of the total volume handled,” added the company.

The ship was paralyzed horizontally on the waterway after strong winds. Several tugs were sent to the site and a team from Smit Salvage was called in to assist in the operation.

“Dredging operations to assist the vessel’s refluxant continue. In addition to the dredgers already on site, a specialized suction dredge has arrived at the site,” said Bernhard Schulte Shipmanagement, the vessel’s technical manager, in a note. The company said that one of the first attempts to float the ship on Thursday was unsuccessful and that another attempt would be made later in the day.

The huge cargo carrier is over 1,300 feet long and about 193 feet wide. It weighs over 200,000 tons. One end of the ship was attached to one side of the channel, with the other extending almost to the other bank.

Almost 19,000 ships passed through 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.

Lieutenant-General Ossama Rabei, center, head of the Suez Canal Authority, with a team walking along the banks of the Suez Canal, where Ever Dado, a Panama-flagged cargo ship, was trapped in the Suez Canal and blocking traffic on the vital waterway. An operation is underway to try to free the ship, which further threatened global shipments on Thursday, as at least 150 other ships that need to pass through the waterway are stopped waiting for the obstruction to pass.

Suez Canal Authority | AP

Oil prices jumped about 6% on Wednesday, with West Texas Intermediate and Brent oil futures having their best day since November. But on Thursday, contracts were back in the red, with concerns about demand weighing amid blockades in Europe.

Blocking the channel further aggravates supply chains that were already strained amid the interruptions caused by Covid-19.

“While it is still premature to assess the full impacts of the incident, our channel checks indicate in the short term, the block is likely to increase supply tensions in the industry, which are already hampered by continuous supply chain bottlenecks (port and vessel congestion / shortage of containers) caused by COVID-19, as ships redirect current voyages to alternative routes, which will result in longer voyage times and causing more delays, “wrote JPMorgan in a note to customers.

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