The Impact of the Suez Canal Boat

A massive container barge that had been firmly stuck in the Suez Canal starting on or about the 30th of March is now free of the shoreline.

Peter Berdowski, the man in charge of a salvaging company in the Netherlands called Boskalis, issued a statement on the matter in which he detailed how the ship, known as the Ever Given, was declared to be floating freely once more at 13:05 GMT on Monday the 31st. Henceforth, “…free passage through the Suez Canal [is] possible again.” That being said, it’s unclear as of this writing when the canal will observe full traffic again.

The blockage spawned a virtually limitless amount of concern and upset for the international shipping community. Upon a closer look at the numbers involved, this frustration is completely understandable.

The Ever Given is one of the biggest container vessels in the world. It has a length of 400 meters – 1,312 feet – and weighs 200,000 tons. Its maximum capacity is 20,000 containers, and is understood to have 18,300 currently aboard. A Taiwanese transportation company called Evergreen Marine currently operates the ship.

On that fateful day, the Ever Given became stranded when it ran ashore and lodged itself horizontally across the waterway. It was initially claimed that a particularly heavy gust of wind was responsible. At the time the vessel ran aground, the wind speed was measured at 40 knots. This suspicion was later discounted as the sole culprit by the Suez Canal Authority (SCA). At this point, it is still too early to determine whether any human or technical errors have yet to be unearthed.

Over three hundred ships were eventually stuck in line waiting for a chance to pass through the 120 mile-long canal. While they floated there, Twitter displayed over 145,000 interactions with the hashtag #SuezBLOCKED, which was shared more than 133,000 times, per brand monitoring firm BrandMentions.

14 tugboats attempted to dislodge the Ever Given, traveling out to it at high tide to push and pull on the monolithic vessel. It’s been reported that they managed to shift the ship by about 30 degrees.

On the first of April, after multiple reports describing the vessel as partially freed from its wedged position, the SCA stated that the Ever Given had been completely refloated. SCA head Osama Rabie said the blockage had run up at least $14 million – $15 million in costs each day it continued, but now typical maneuvers can resume, with the ship being positioned in the center of the navigable portion of the waterway. It should be noted that a portion of the backlog of vessels, possibly hundreds of ships, still waiting for an opportunity to traverse the canal.

The importance for global trade of the Suez Canal cannot be understated. Approximately 12% of international trade, close to one million barrels of crude, and somewhere around 8% of liquified natural gas moves through this region every day. Before the pandemic, an estimated 2% of Egypt’s GDP stemmed from passage through the canal.

Data compiled from Lloyd’s List indicated that the blockage was arresting the movement of some $9.6 billion worth of trade for every day until the Ever Given was refloated. Put another way, that was $400 million and about 3.3 million tons of goods every hour – $6.7 million per minute.

The big picture vis a vis the fallout from this disaster has been analyzed extensively by German insurer Allianz. They’ve indicated that global trade could suffer for a long time or perhaps even permanently as a result of what’s happened. Allianz estimates that between $6 billion and $10 billion of additional costs could be exacted every week. Additionally, yearly global trade growth could be reduced by between 0.2% and 0.4%.

Braemar ACM, a shipping broker which spoke with the Wall Street Journal recently on the matter, discussed how the price of renting ships to transport cargo between Asia and the Middle East has increased to $2.2 million – a 47% spike. Some vessels have had no choice but to refrain from pursuing routes through the canal. This is resulting in an estimated average of eight additional days added to the journeys of these ships.

The number of businesses affected, be they domestic transportation services, retail outlets, manufacturers, supermarkets, of other industries, is difficult to process. Certainly, it will take some time to assess the progress of unmolested trade through the canal and around the world before the actual nature and severity of the damage sustained in the incident can be measured.

British companies informed the BBC that the jury is still out on when their goods were likely to arrive at their intended destinations. In particular, the UK’s Seaport Freight Services has spoken about the 20 containers of goods like coconut milk, various syrups, parts for motors, fork lift trucks, and Amazon products it had temporarily lost track of on aboard the Ever Given. There remains concern that costs to divert and resupply goods guaranteed to other entities consorting with Seaport Freight might overwhelm the company.

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