Suez Canal Blocked by Massive Cargo Ship
Above is a digger attempting to clean mud and sand away from the ship’s bow (Source: BBC)
March 28th, 2021
The Suez Canal in Egypt was blocked by a shipping container, the Ever Given, on March 23rd and has majorly disrupted world trade. It stretches longer than the Eiffel tower and the 224,000-ton boat created a bottleneck due to high winds and a sand storm.
According to Bloomberg, the Canal is 120 miles long and connects the Mediterranean in the north with the Red Sea in the south. More than 1 million barrels of oil pass through the Suez each day. Also, 12% of global trade uses the Canal, making it a very important point of the passage.
The Canal affects trade substantially and shortens maritime transportation tremendously. For instance, traveling from the Suez Canal to Amsterdam, Netherlands takes 13 days compared to 41 days if that same vessel traveled around the southern tip of Africa through the Cape of Good Hope. Many companies have desperately resorted to the latter option.
That being said, pirates have often prayed on boats moving around the Horn of Africa. Genevieve Giuliano, a professor at the University of Southern California’s Sol Price School of Public Policy told the Washington Post that “there is a risk there, and it’s probably another reason why the ocean carriers will think twice before they actually go around the Horn”.
Boats will be forced to travel past Somalia, West Africa, and the Gulf of Guinea which has the highest rates of piracy in the world. Data from the International Maritime Bureau indicated that out of the 135 maritime kidnappings in 2020, 130 were in the Gulf of Guinea.
Each day the delay grows more and more expensive for companies. A study done by Lloyd’s List estimates that more than 32o ships are stuck on either side of the Ever Given. The delay costs $400 million an hour in trade, or “Lloyd’s values the canal’s westbound traffic at roughly $5.1 billion a day, and eastbound traffic at around $4.5 billion a day.”
The blockage affected the industrials company Caterpillar (CAT: NYSE) which is one of the biggest machinery producers in the world. The maker of the iconic yellow bulldozer is considering airlifting products in, if necessary.
Many other companies are also facing supply chain issues, like Swedish furniture company Ikea and Seabay International Freight Forwarding Ltd., a Chinese company that oversees goods sold on platforms such as Amazon (AMZN: NasdaqGS).
The canal is also a serious chokepoint for Persian Gulf oil and 10% of all seaborne oil passes through the canal. Oil futures are steadily rising with the U.S. benchmark, West Texas Intermediate crude for May delivery (CL.1), gaining 3.69% on Friday.
It’s still unclear how long the blockage will continue, but experts predict it could last weeks. However, efforts are being made to free the vessel. Lt. Gen. Osama Rabie said the Suez Canal Authority (SCA) needed to prepare all options, such as removing some of the 18,300 containers on the 1,300-foot ship.
Egyptian authorities also have dredgers vigorously working to dislodge the vessel and have moved 27,000 tons of sand as of Sunday. There are also a total of 14 tugboats working “around the clock” to free it.
In the meantime, the internet has erupted in a barrage of memes about the situation. Ranging from people ironically comparing the tiny excavator to the colossal vessel along with ideas on how to dislodge the ship.