Suez Canal blockage is a wake-up call
The grounding of the Ever Given mega-container ship in the Suez Canal has clogged a major global trade artery. The giant vessel has a capacity of 20,000 containers and was en route from Yantian, in China, to the Port of Rotterdam in the Netherlands when it ran aground and blocked the waterway.
The Ever Given is owned by Japan’s Shoei Kisan Kaisha and chartered to Taiwanese line Evergreen and the ripple effect of the incident on shipping is only now being realized.
This is not the first time that a ship has become stuck in the Suez Canal which is a vital passageway between east and west. Previous groundings have involved smaller vessels, including the Fabiola which blocked southbound transits for two days in 2016, and the Maersk Shams in 2015 that was refloated on the same day with little disruption.
But this time it is different. The latest blockage is a wake-up call to guaranteeing that the Suez Canal chokepoints remain free and clear from such incidents. If the canal does reopen quickly, vessels waiting now should be able to make up time without too much disruption to global supply chains already weighed down by port congestion and inland transportation delays caused by the coronavirus pandemic.
So, the Suez infarction has occurred while the human race is living through the pandemic. The body is ill.
It is not yet clear what caused the Ever Given to run aground but initial reports suggested the ship had experienced engine trouble. However, a spokesman for the vessel’s technical managers ruled out any suggestion of mechanical or technical failure.
The Ever Given is now under salvage contract in coordination with the Suez Canal Authority to move the vessel and to reopen the canal, but estimates vary to the length of time it will take for a full resumption of traffic.
The key question is what to do? Remedies include waiting for higher tides, or to dig out a wide turning circle by digging up banks of the canal, but that solution will take time and require specialist equipment. Another option is to lighten the vessel, although this would be a more complicated salvage operation.
Given the size of the ship — the length of four football pitches — and the fact that it is fully loaded, efforts to remove containers using a crane barge will be challenging.
Shippers will soon have to reroute around the Cape of Good Hope to keep Asia-northern Europe and Asia-US east coast logistical services running. Such a move will generate extra insurance and other shipping costs and delay deliveries by weeks. And the coronavirus pandemic will only add to the snowball effect.
Containerized goods represent around 26 percent of the total Suez Canal traffic, with westbound shipping estimated to be worth around $5.1 billion a day and eastbound daily traffic $4.5 billion. In the first day of the blockage, 165 vessels — including 41 bulk carriers, 20 Panamax and Supramax vessels, and two bulk ore ships — were either waiting at one end of the canal or being prevented from exiting.
The breakdown becomes more interesting. There were 24 crude tankers, including three supertankers (VLCCs) and nine Suezmax vessels; 33 container ships, four of which (including the Ever Given) are of 197,000-plus deadweight tonnage; 16 liquefied petroleum or natural gas carriers; eight vehicle carriers; and 15 product tankers, including long-range ships carrying 90,000-ton cargoes of jet fuel or diesel to Europe. The backlog, just for energy vessels alone, is around 50 per day.
Safeguarding the back-up of vessels is vital because of maritime security threats. Such delays send signals that these ships may be ripe for attack or acts of piracy, inspiring some groups to take advantage of the situation.
Safeguarding the back-up of vessels is vital because of maritime security threats.
Dr. Theodore Karasik
So, the Ever Given incident is creating opportunity for certain actors to potentially interrupt logistical flows. With ships possibly having to divert around the southern tip of Africa, piracy also becomes a threat in the Gulf of Guinea and nations along the Gulf’s coastline need to be on full alert over the coming weeks.
The blockage of the Suez Canal makes it even more important to ensure that other waterways remain free and clear. The Ever Given incident is a wake-up call to the logistical chain and one from which lessons must be learned.
The Panama Canal, which connects the Atlantic and Pacific oceans, has in the past experienced problems of its own and situations of this kind in narrow waterways serve to highlight that logistical flow control is key to global economic security.
- Dr. Theodore Karasik is a senior adviser to Gulf State Analytics in Washington, D.C. Twitter: @tkarasik