Cargo Ship Blocks Suez Canal

The Suez Canal, constructed in the 1860s and currently operated by Egypt’s Suez Canal Authority (SCA), is a 193km waterway connecting Europe and Asia. The canal is a major shipping route as it cuts traveling distance of ships by thousands of kilometres, allowing goods to be transported quickly and more cost efficiently across the world.

On March 23rd, the ‘Ever Given,’ a 200,000-tonne cargo ship en route to the Netherlands, ran aground due to poor visibility and navigation caused by strong winds and a sandstorm. Even so, the SCA reported that grounding may have been a result of “technical or human reasons.” Because the canal is only 265m wide, the 400m long ship wedged in between the canal inhibited the passage of any other vessel. Evergreen Marine Corp., a Taiwanese-based transport company, operates the ‘Ever Given’ which is owned by Shoei Kisen Kaisha who apologized for the inconvenience the blockage was causing and confirmed that refloating the ship was proving to be very difficult.

By March 28th, nearly 400 vessels―including container ships, tankers, and bulk carriers―were blocked from crossing the canal and since the canal serves upwards of 12% of global shipping traffic; the SCA lost $13-15 million in revenue everyday. After applying all kinds of methods, including the use of tug boats, dredgers, and cranes, salvage teams from Egypt and other countries, like the Netherlands, finally dislodged the ‘Ever Given’ on March 29th. Even though these salvage methods were administered throughout the week, administering them all together tirelessly through the weekend is what caused the ship to refloat.

Regardless of this victory, the weeklong delays in shipping passes through the canal caused a significant disturbance in global commerce. At the time, this was seen through a rise in oil and coffee―two of the most traded commodities worldwide―prices as well as with the potential wastage of time-sensitive goods (e.g., food and medicine) in the ships left waiting. Along with this, the nearly 20 livestock vessels experiencing delays caused concerns about animals at risk of starvation and dehydration.

The blockage caused an estimated $9.6 billion setback in supply chain trade daily that can result in second/third-order effects for months to come. Many argue that the crisis was yet another warning about “excessive globalization” that is inevitably causing a heavy dependence on global supply chains. The interconnectedness of this system highlights the widespread, long-term implications that may follow if another crisis occurs.

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