Tugboats have successfully freed the colossal container ship that caused one of the world’s most expensive traffic blocks in shipping history as the Suez Canal is back in business. However, experts confirm that the ripple effect from this blockade that lasted over a week will affect the global shipping trade for many months to come.
The Suez Canal Crossing is a man-made waterway that connects the Mediterranean Sea to the Indian Ocean via the Red Sea commissioned in 1858, and since the 19th century, the canal has expanded and widened to allow for much larger and heavier vessels to pass through. It is an important shipping channel allowing for crucial container cargo to pass from the North Atlantic to the Indian Ocean without having to circumnavigate the African Continent cutting voyage time by almost half.
The Ever Given is a Golden-class container ship, one of 13 of the largest ships in the world with a length and height overall of 400 meters and 58 meters respectively, capable of carrying over 20,000 containers. It is owned by Shoei Kisen Kaisha (A ship owning and leasing subsidiary of the large Japanese shipbuilding company Imabari Shipbuilding) and is named Ever Given following the ship-naming convention of Evergreen Marine, where ships nearly all begin with the word ever.
On 23 March 2021, while voyaging from China to the Netherlands, the ship ran aground after experiencing power failure and a total blackout; strong currents and gusting winds are thought to have pushed the dead ship and wedged her diagonally, blocking the channel crossing.
During this time, it was reported that more than 257 large container vessels were backed up in and around the waterway waiting, for the convoys to resume, given that the Suez Canal is one of the major waterways for trade flow to Europe.
Now 257 vessels waiting around the Suez Canal, more than double Friday's figures! The congestion continues to build, so much so that many vessels are making the bold move to now divert around the Cape of Good Hope to avoid the chaos…#suezcanal #EVERGIVEN #worldwidenews #trade pic.twitter.com/ftrHirSq8N
— VesselsValue (@VesselsValue) March 29, 2021
The Ripple Effect
It was reported that during the blockage, more than 16 crude oil-laden vessels were halted from supplying European ports with the essential resource.
Wood Mackenzie VesselTracker estimates that this unfortunate incident resulted in oil prices in the Atlantic Basin rising by more than two dollars a barrel with a further prolonged impact on the Atlantic Basin Market.
Therefore, it is then only natural to expect a price hike in almost all trade goods, given that trade relies heavily on the steady supply of crude oil to keep the market going.
Speaking to Offshore Energy, Lars Jensen, CEO of SeaIntelligence, also commented on the potential impact on the containers trade and the global market, with trade flows being expected to be delayed for the next several weeks.
“The delay will cause a spike of cargo into the main ports in Europe as this will now arrive at the same time as cargo arriving normally a few days later, which will result in pot congestions. On top of that, it also delays the movement of over 50,000 TEU’s (Twenty-foot Equivalent Unit) back to Asia per day.”
There is delay in sending empty containers back to Asia will result in much of the exports from major Asian exporters such as China being delayed resulting in losses that could be experienced for months.
What Happens Now
Since the ship has successfully been freed with the help of tireless efforts from local authorities, the vessel will be moved to an adjoining lake to be inspected and for further investigations to be carried out into the sudden power outage.
Reuters reported on Monday that traffic had resumed transit from the Great Bitter Lake with ships travelling southwards towards the Red Sea and already some having left the region preferring an alternative, longer route around the Cape of Good Hope.
The Maersk shipping group and partners who manage a majority of TEU’s transported across the globe reported that the clearing of vessels from the channel was going well, with the total queue currently at 227 ships and reducing gradually.
However, experts predict that it will be sometime before the domino effects of this critical incident subside and trade flow returns back to normal.