Shipping companies reroute ships as Suez remains stuck

Shipping lines have started rerouting their ships around the Cape of Good Hope as the Suez Canal remained blocked for the sixth day in a row due to a blocked container ship.

Some ships are even asked to turn around and unload their cargo in nearby ports.

One of the largest shipping companies in the world, Mediterranean Shipping Company (MSC) has decided to redirect 11 of its container ships to the southern tip of Africa. This includes Conti Cortesia, which had stopped over at Nhava Sheva and Mundra in India last week.

“MSC expects this incident to have a very significant impact on the movement of containerized goods, disrupting supply chains beyond the existing challenges posed by the Covid-19 pandemic,” the company said in a statement. information note to customers.

MSC has also asked two of its ships, including MSC Stella which called at the ports of Mundra and Hazira earlier this month, to turn back. The container ship will discharge its cargo at King Abdullah Port in Saudi Arabia and return to India, MSC said.

It is unclear at this stage who will pay the demurrage charges for the unloaded cargo.

“There will be port charges for the cargo that is unloaded at these ports,” said Ramkumar Govindarajan, managing director of Wiz Freight, a digital freight forwarding company. “It will be up to the shipping company to decide whether they will charge customers or waive. It’s something we’re still discussing. »

Hyundai Merchant Marine (HMM) and Evergreen Marine Corp, among others, have also started redirecting their vessels.

The latter operates the Ever Given, the ship wedged between the banks of the Suez Canal.

Shipping lines do not charge customers extra to take the longest route around Africa for ships that have sailed before, industry insiders told ET. However, if this continues, the transport costs, which have already been high for a few months, will increase further.

In its memo, MSC said there will be missed sailings as a result of this incident and the company may reduce the volumes of bookings it accepts depending on the reduced capacity available.

Other shipping companies gave similar outlook. This will lead to a shortage of capacity and, subsequently, price hikes, experts said.

“Even though the Suez Canal is opening in a short period of time, the dominoes have been knocked down,” said Lars Jensen, CEO of SeaIntelligence Consulting, a consultancy specializing in the container shipping industry.

“The delays and reroutings that have already occurred will have ripple effects on empty vessels and equipment that will be felt for several months, not to mention the foreseeable congestion problems, particularly in Europe, when the canal reopens and that a rush of goods will arrive at ports at the same time,” he said in a social media post.

Shipping companies have yet to announce their price charts for the first week of April in India as they assess the situation. Ideally, the rates should have been available earlier this week.

Reports suggest that over 300 ships are stranded on either side of the Suez Canal.

A video on social media showed that the tugs managed to move Ever Given slightly.