Trends

What Happened In The Suez Canal And Its Impact On Global Trade

This blockage in the canal led to a long queue of vessels trying to cross it, considering that the Suez canal is the most highly used shipping lane.

After a week being diagonally jammed in Egypt’s Suez Canal, the 400-meter (430-yard) long Ever Given has been refloated. This giant container ship had been blocking the busy waterway and halting traffic on one of the important shipping routes between Europe and Asia.

“Admiral Osama Rabie, the Chairman of the Suez Canal Authority (SCA), announces the resumption of maritime traffic in the Suez Canal after the Authority successfully rescues and floats the giant Panamanian container ship EVER GIVEN," a statement from the SCA said.

"She's free," an official involved in the salvage operation said.

To pull the ship off approximately 30,000 cubic meters of sand was dredged to refloat the 224,000-ton container ship and further, a total of 11 tugs and two powerful sea tugs were employed to carry out this operation. According to live footage from local television, the ship was surrounded by tug boats and was moved slowly to the center of the canal on Monday afternoon, and the ship was said to be sailing at a speed of 1.5 knots.

How did this traffic jam occur in the Suez Canal?

This historic human-made waterway was built in 1869, and it facilitates several shortcut routes for ships moving across Europe and Asia, who previously had to sail through Africa and take longer routes to finish the journey. Thus, the Suez Canal accounts to be the world’s most heavily used shipping lanes, transporting over 12% of world trade by volume.

In the previous week, a Panama-registered container ship called the Ever Given was responsible for blocking the canal pathway. The ship that was built in 2018, and is 400-m long and 59-m wide was traveling to Rotterdam in the Netherlands from China and a disaster caused by brutal weather conditions led to the ship getting stuck in the canal.

Thus, while traveling northwards through the canal, on Tuesday morning local time, the ship that weighed 2 lakh tonnes and wanted to enter the Mediterranean Sea got stuck sideways across the canal, stopping the path of other ships waiting to cross through on both sides.

Evergreen Marine, a Taiwanese transport company that runs the ship, stated that the ship was “suspected of being hit by a sudden strong wind, causing the hull to deviate… and accidentally hit the bottom and run aground”. The company further added that none of the crew members was injured.

Indian Express reported, “The 200,000-tonne vessel en route from the Red Sea to the Mediterranean ran aground at about 7:40 a.m. (05:40 GMT) on Tuesday after the ship suffered a blackout, port agents GAC said on its website. GAC said 15 other ships in the northbound convoy behind the vessel were detained at anchorages waiting for the canal to be cleared. A southbound convoy was also blocked.”

The economic impact of this traffic jam

Considering that the Suez canal is the most highly used shipping lane across the globe, this blockage has resulted in a long queue of vessels trying to cross the canal

Experts further speculate that once the ship is removed, the canal could take several days to get fully functional. Any kind of blockage that lasts for days can have a major impact on global trade as the alternative routes that operate from Africa take a week longer than the Suez Canal route. As per SCA data, approximately 19,000 ships (an average of 51.5 ships per day) with a net tonnage of 1.17 billion tonnes passed through the canal in the year 2020. Thus, such a delay lead to a shortage of container vessels and boxes, as 30 percent of all container ships in the world pass through the Suez canal.

“Even when the canal gets reopened, the ripple effects on global capacity and equipment are significant," the world's largest container shipping company Maersk said in a customer advisory on Monday. The company had three vessels stuck in the canal and had re-routed 15 vessels to sail in the south of Africa, while 29 of them were waiting to enter and pass through the canal

"Assessing the current backlog of vessels, it could take six days or more for the complete queue to pass," the company added.

Switzerland's MSC stated on Saturday that the scenario is "going to result in one of the biggest disruptions to global trade in recent years".

"Unfortunately, even when the canal re-opens for the huge backlog of ships waiting at anchorage this will lead to a surge in arrivals at certain ports and we may experience fresh congestion problems," Caroline Becquart, Senior Vice President with MSC said in a statement.

"We envisage the second quarter of 2021 being more disrupted than the first three months, and perhaps even more challenging than it was at the end of last year", the statement added.

The Indian shipments of oil, textiles, furniture, cotton, auto components and machine parts to Europe, North America, and South America are also expected to be delayed by 10-15 days. But the most detrimental impact could be on the fuel prices in India, which are already surging high. India is one of the top importers of crude oil from the gulf region and all of these commodities majorly utilize the Suez Canal.

The Week states, “A prolonged blockade will see ramifications in India's crude oil sector, which has recently increased the imports from Latin America. The resultant impact will show up in the form of higher crude prices, eventually trickling down in retail price terms.”

Trends

What Happened In The Suez Canal And Its Impact On Global Trade

This blockage in the canal led to a long queue of vessels trying to cross it, considering that the Suez canal is the most highly used shipping lane.

After a week being diagonally jammed in Egypt’s Suez Canal, the 400-meter (430-yard) long Ever Given has been refloated. This giant container ship had been blocking the busy waterway and halting traffic on one of the important shipping routes between Europe and Asia.

“Admiral Osama Rabie, the Chairman of the Suez Canal Authority (SCA), announces the resumption of maritime traffic in the Suez Canal after the Authority successfully rescues and floats the giant Panamanian container ship EVER GIVEN," a statement from the SCA said.

"She's free," an official involved in the salvage operation said.

To pull the ship off approximately 30,000 cubic meters of sand was dredged to refloat the 224,000-ton container ship and further, a total of 11 tugs and two powerful sea tugs were employed to carry out this operation. According to live footage from local television, the ship was surrounded by tug boats and was moved slowly to the center of the canal on Monday afternoon, and the ship was said to be sailing at a speed of 1.5 knots.

How did this traffic jam occur in the Suez Canal?

This historic human-made waterway was built in 1869, and it facilitates several shortcut routes for ships moving across Europe and Asia, who previously had to sail through Africa and take longer routes to finish the journey. Thus, the Suez Canal accounts to be the world’s most heavily used shipping lanes, transporting over 12% of world trade by volume.

In the previous week, a Panama-registered container ship called the Ever Given was responsible for blocking the canal pathway. The ship that was built in 2018, and is 400-m long and 59-m wide was traveling to Rotterdam in the Netherlands from China and a disaster caused by brutal weather conditions led to the ship getting stuck in the canal.

Thus, while traveling northwards through the canal, on Tuesday morning local time, the ship that weighed 2 lakh tonnes and wanted to enter the Mediterranean Sea got stuck sideways across the canal, stopping the path of other ships waiting to cross through on both sides.

Evergreen Marine, a Taiwanese transport company that runs the ship, stated that the ship was “suspected of being hit by a sudden strong wind, causing the hull to deviate… and accidentally hit the bottom and run aground”. The company further added that none of the crew members was injured.

Indian Express reported, “The 200,000-tonne vessel en route from the Red Sea to the Mediterranean ran aground at about 7:40 a.m. (05:40 GMT) on Tuesday after the ship suffered a blackout, port agents GAC said on its website. GAC said 15 other ships in the northbound convoy behind the vessel were detained at anchorages waiting for the canal to be cleared. A southbound convoy was also blocked.”

The economic impact of this traffic jam

Considering that the Suez canal is the most highly used shipping lane across the globe, this blockage has resulted in a long queue of vessels trying to cross the canal

Experts further speculate that once the ship is removed, the canal could take several days to get fully functional. Any kind of blockage that lasts for days can have a major impact on global trade as the alternative routes that operate from Africa take a week longer than the Suez Canal route. As per SCA data, approximately 19,000 ships (an average of 51.5 ships per day) with a net tonnage of 1.17 billion tonnes passed through the canal in the year 2020. Thus, such a delay lead to a shortage of container vessels and boxes, as 30 percent of all container ships in the world pass through the Suez canal.

“Even when the canal gets reopened, the ripple effects on global capacity and equipment are significant," the world's largest container shipping company Maersk said in a customer advisory on Monday. The company had three vessels stuck in the canal and had re-routed 15 vessels to sail in the south of Africa, while 29 of them were waiting to enter and pass through the canal

"Assessing the current backlog of vessels, it could take six days or more for the complete queue to pass," the company added.

Switzerland's MSC stated on Saturday that the scenario is "going to result in one of the biggest disruptions to global trade in recent years".

"Unfortunately, even when the canal re-opens for the huge backlog of ships waiting at anchorage this will lead to a surge in arrivals at certain ports and we may experience fresh congestion problems," Caroline Becquart, Senior Vice President with MSC said in a statement.

"We envisage the second quarter of 2021 being more disrupted than the first three months, and perhaps even more challenging than it was at the end of last year", the statement added.

The Indian shipments of oil, textiles, furniture, cotton, auto components and machine parts to Europe, North America, and South America are also expected to be delayed by 10-15 days. But the most detrimental impact could be on the fuel prices in India, which are already surging high. India is one of the top importers of crude oil from the gulf region and all of these commodities majorly utilize the Suez Canal.

The Week states, “A prolonged blockade will see ramifications in India's crude oil sector, which has recently increased the imports from Latin America. The resultant impact will show up in the form of higher crude prices, eventually trickling down in retail price terms.”

Trends

What Happened In The Suez Canal And Its Impact On Global Trade

This blockage in the canal led to a long queue of vessels trying to cross it, considering that the Suez canal is the most highly used shipping lane.

After a week being diagonally jammed in Egypt’s Suez Canal, the 400-meter (430-yard) long Ever Given has been refloated. This giant container ship had been blocking the busy waterway and halting traffic on one of the important shipping routes between Europe and Asia.

“Admiral Osama Rabie, the Chairman of the Suez Canal Authority (SCA), announces the resumption of maritime traffic in the Suez Canal after the Authority successfully rescues and floats the giant Panamanian container ship EVER GIVEN," a statement from the SCA said.

"She's free," an official involved in the salvage operation said.

To pull the ship off approximately 30,000 cubic meters of sand was dredged to refloat the 224,000-ton container ship and further, a total of 11 tugs and two powerful sea tugs were employed to carry out this operation. According to live footage from local television, the ship was surrounded by tug boats and was moved slowly to the center of the canal on Monday afternoon, and the ship was said to be sailing at a speed of 1.5 knots.

How did this traffic jam occur in the Suez Canal?

This historic human-made waterway was built in 1869, and it facilitates several shortcut routes for ships moving across Europe and Asia, who previously had to sail through Africa and take longer routes to finish the journey. Thus, the Suez Canal accounts to be the world’s most heavily used shipping lanes, transporting over 12% of world trade by volume.

In the previous week, a Panama-registered container ship called the Ever Given was responsible for blocking the canal pathway. The ship that was built in 2018, and is 400-m long and 59-m wide was traveling to Rotterdam in the Netherlands from China and a disaster caused by brutal weather conditions led to the ship getting stuck in the canal.

Thus, while traveling northwards through the canal, on Tuesday morning local time, the ship that weighed 2 lakh tonnes and wanted to enter the Mediterranean Sea got stuck sideways across the canal, stopping the path of other ships waiting to cross through on both sides.

Evergreen Marine, a Taiwanese transport company that runs the ship, stated that the ship was “suspected of being hit by a sudden strong wind, causing the hull to deviate… and accidentally hit the bottom and run aground”. The company further added that none of the crew members was injured.

Indian Express reported, “The 200,000-tonne vessel en route from the Red Sea to the Mediterranean ran aground at about 7:40 a.m. (05:40 GMT) on Tuesday after the ship suffered a blackout, port agents GAC said on its website. GAC said 15 other ships in the northbound convoy behind the vessel were detained at anchorages waiting for the canal to be cleared. A southbound convoy was also blocked.”

The economic impact of this traffic jam

Considering that the Suez canal is the most highly used shipping lane across the globe, this blockage has resulted in a long queue of vessels trying to cross the canal

Experts further speculate that once the ship is removed, the canal could take several days to get fully functional. Any kind of blockage that lasts for days can have a major impact on global trade as the alternative routes that operate from Africa take a week longer than the Suez Canal route. As per SCA data, approximately 19,000 ships (an average of 51.5 ships per day) with a net tonnage of 1.17 billion tonnes passed through the canal in the year 2020. Thus, such a delay lead to a shortage of container vessels and boxes, as 30 percent of all container ships in the world pass through the Suez canal.

“Even when the canal gets reopened, the ripple effects on global capacity and equipment are significant," the world's largest container shipping company Maersk said in a customer advisory on Monday. The company had three vessels stuck in the canal and had re-routed 15 vessels to sail in the south of Africa, while 29 of them were waiting to enter and pass through the canal

"Assessing the current backlog of vessels, it could take six days or more for the complete queue to pass," the company added.

Switzerland's MSC stated on Saturday that the scenario is "going to result in one of the biggest disruptions to global trade in recent years".

"Unfortunately, even when the canal re-opens for the huge backlog of ships waiting at anchorage this will lead to a surge in arrivals at certain ports and we may experience fresh congestion problems," Caroline Becquart, Senior Vice President with MSC said in a statement.

"We envisage the second quarter of 2021 being more disrupted than the first three months, and perhaps even more challenging than it was at the end of last year", the statement added.

The Indian shipments of oil, textiles, furniture, cotton, auto components and machine parts to Europe, North America, and South America are also expected to be delayed by 10-15 days. But the most detrimental impact could be on the fuel prices in India, which are already surging high. India is one of the top importers of crude oil from the gulf region and all of these commodities majorly utilize the Suez Canal.

The Week states, “A prolonged blockade will see ramifications in India's crude oil sector, which has recently increased the imports from Latin America. The resultant impact will show up in the form of higher crude prices, eventually trickling down in retail price terms.”

WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO
WATCH VIDEO