Global trade affected by a vessel blocking the Suez Canal

Today marks the third day of ongoing attempts to unblock the Suez Canal after a large vessel, Ever Given, operated by the shipping company Evergreen, became wedged across one of the world’s busiest trade routes. 

Having the length of four football pitches and carrying 220,000 ton, it is not an easy obstruction to refloat. What adds to the pressure that the authorities are facing is the 150+ cargo shipments stuck on either side of the canal. 

Peter Berdowski, the CEO of specialist dredging company Boskalis which are at the scene, said the data so far suggests that “it is not really possible to pull it loose” which points to the high possibility of having to unload the entire vessel – aa process that could take weeks.

The importance of the Suez Canal on global trade

  • The Suez Canal connects the Mediterranean with the Red Sea
  • It is the shortest avenue for vessels to pass between Asia and the Middle East and Europe
  • Nearly 19,000 ships passed through the canal in 2020, according to the Suez Canal Authority – an average of 51.5 ships per day
  • This accounts for around 12% of world trade 
  • It is an important route for vessels carrying oil and liquified natural gas
  • It is also crucial to the distribution of manufactured goods from China to Europe
The Suez Canal blocked - uk customs solutions
Source: MarineTraffic.com, 24 March, 9:55 GMT

What happened to Ever Given

It’s been reported that the 400 meters long vessel was run aground on Tuesday morning due to strong winds and dust storms. Egyptian forecasters confirm that high winds and sand storm hit the area on Tuesday, with gusts of up to 50km/h (30mph). 

Since the incident, there have been dredgers at the scene, clearing away mud and sand from around the vessel. At the same time, tugboats and winches are attempting to shift the vessel to set it back afloat.

GAC, a Dubai-based marine services company, said on Wednesday the vessel had been partially refloated and was now resting alongside the canal bank. “Convoys and traffic are expected to resume as soon as vessel is towed to another position,” it said.

Whether the operation is close to completion or not, the three-day-long blockage has already stopped many cargo vessels from continuing on their routes and arriving on time at their destination ports. 

Dr Sal Mercogliano, a maritime historian based in the US state of North Carolina, told the BBC that incidents such as this were rare, but could have “huge ramifications for global trade”.

Vessel blocking suez canal - uk customs solutions
Picture: AP

Effects of the Suez Canal blockage on global trade

Being one of the busiest passages between Asia and Europe, the blockage of the Suez Canal is likely to have huge negative impacts on global trade. 

While the operation to refloat the vessel is going on, there are at least 150 ships carrying oil, automotive parts and consumer goods accumulated on both sides of the trade channel. 

For a global trading system already shaken up by more than a year of COVID-19, it promises more disruption. 

Dr Laleh Khalili, Professor of International Politics at Queen Mary University of London and author of Sinews of War & Trade, says prolonged closure could cause profound disruption.

“There are about 50 ships that go through the canal north and south every day, and because these are massive ships that is an enormous amount of trade; millions of gallons of oil, millions of tonnes of manufactured goods, hundreds of thousands of containers are going through the canal in any given week,” she said.

“The longer the canal is closed the longer those convoys end up becoming, and the slower they become.

“If a ship’s schedule is delayed by being stuck in the Red Sea it might be that it loses its scheduled berthing time at the port at which it arrives, so it has knock-on effects beyond the Suez Canal itself.”

Furthermore, industry experts are speculating that this could lead to a flood of insurance claims covering the vast amounts of cargo that have been held up was likely.

 

If you’re looking for advice or assistance from industry experts, get in touch with our friendly UKCS team who can guide you through solutions available to you, no matter what your customs clearance requirements are.

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