How Blocking the Suez Canal Can Seriously Harm Global Trade | International exchange

The world’s main trade shortcut – the Suez Canal – is facing “massive” disruptions that could lead to freight delays around the world, shipping experts warned on Friday.

The narrow 120-mile water passage connecting the Red Sea and the Mediterranean allows ships of colossal proportions to navigate a relatively direct route from Asia to Europe, rather than taking a 3,500-mile detour around of Africa.

However, on Tuesday, the MV Ever Given – a quarter-mile-long Japanese-owned megaship operated by Taiwan’s Evergreen Marine – got stuck and blocked the way.

“The disruption is massive,” said Guy Platten, secretary general of the International Chamber of Shipping (ICS). “There are well over 200 ships waiting to use the canal and the number is growing and shipping companies are making this difficult decision to circumvent Africa.”

Tugboats and dredgers attempt to free the MV Ever Given. Photo: Satellite image ©2021 Maxar Tech/AFP/Getty Images

About 12% of world trade passes through the Suez Canal, carrying more than $1 billion worth of goods annually. About 50 ships a day, carrying a total of $3 billion to $9 billion in cargo, will make the north or south journey between the Port of Suez and Port Said.

The grounded Ever Given alone carries up to 20,000 containers; and in the queue behind him are more than 16 tankers.

Container ships now make up the bulk of traffic at Suez, whose fees paid to the Suez Canal Authority amounted to $5.6 billion in revenue for Egypt last year. A long delay while salvaging the ship will affect supply chains and rising costs could inflate everything from oil prices to commodities, some say.

Platten said: “The cargo will be late; the impact will ripple throughout the rest of the world. The demand for ships will increase.

Shipping is resilient, he said, but added: “You miss your slot in a port, you can’t unload your cargo – your grain, your iron ore, any matter of goods or products basic… some are urgent and could perish and affect entire supply chains. And some are carrying vital medical equipment – ​​there will be medium-term disruptions. »

A satellite image shows the Suez Canal blocked by the stranded container ship Ever Given.
A satellite image shows the Suez Canal blocked by the stranded container ship Ever Given. Photography: ROSCOSMOS/Reuters

Platten played down fears that ultra-large container ships – some of which are already unable to navigate the other major passage, the Panama Canal – are likely to struggle, and that this is more than an abnormal event: “There are 18,000 transits every year… the last time it was blocked was in 2013 and it was only for a few hours.

According to shipping specialist Lloyd’s List Intelligence, 114 ships of a similar size have already made the same trip north up the canal to Europe in 2021 without incident.

Captain Stephen Gudgeon, who has helmed international container shipping companies and oil majors, has experienced first-hand the difficulty of steering large vessels through the canal, even with local pilots to help navigate. “The effects of wind in the channel have long been identified as a potential risk, and the best shipping companies will send their captains on simulator courses to deal with it. You never know how the wind is going to blow when you cross,” he said.

“These ships are so huge, the margin of error and the time it takes to lose control is small – you may react very quickly, but it takes time to get over it.”

The alternative passage around the Cape of Good Hope can mean an additional 5-12 days of travel, with additional security risks. “You would have to take armed guards for the Red Sea transit to get you round the Horn of Africa and out of harm’s way,” Gudgeon said. “And you might have to bunker [take on fuel] and pick up shops on the way.

Against the backdrop of the global container crisis, where shortages have fueled skyrocketing shipping prices, and the Covid-19 pandemic which has left many crews at sea for months unable to disembark, the Suez shutdown has at least once again makes the world aware of the ships on which economies depend.

The costs will now run into the many, many millions, says Platten, in salvage alone – with other shipping companies seeking to mitigate their losses and insurers facing huge payouts. “There are no real winners – lawyers except perhaps.”