A satellite image shows the stranded container ship Ever Given after it ran aground in the Suez Canal, Egypt, on March 25, 2021.
CNES Airbus DS | Reuters
Ever Given, one of the largest container ships in the world, is still trapped in the Suez Canal, and the economic effects of the blockade – now on its fourth day – are beginning to manifest.
White House press secretary Jen Psaki said on Friday that the United States is monitoring the situation closely. “We offer US assistance to Egyptian authorities to help reopen the channel … these talks are ongoing,” she said at a news conference, before adding that there could be “some potential impacts on the energy markets”.
Oil prices soared on Friday amid speculation that the ship’s displacement could take weeks. West Texas Intermediate and Brent oil futures advanced more than 4% each. The gains come after prices fell on Thursday, despite the stalemate.
“Traders, changing their minds, have decided that the blockade of the Suez Canal is actually becoming more significant for oil flows and supply deliveries than they previously concluded,” said Paola Rodriguez-Masiu, vice president of oil markets from Rystad Energy.
A satellite image shows the Suez Canal blocked by the stranded container ship Ever Dado in Egypt on March 25, 2021, in this image taken on the Twitter page of Roscosmos Managing Director Dmitry Rogozin. Photo taken on March 25, 2021.
Roscosmos | Reuters
Of the 39.2 million barrels of oil imported by sea in 2020, 1.74 million barrels per day passed through the Suez Canal, according to data from research firm Kpler.
This represents less than 5% of the total flows, but as the accumulation extends, the impacts increase.
Bernhard Schulte Shipmanagement, the ship’s technical manager, said another attempt on Friday to re-float the freighter was unsuccessful.
A specialized suction dredger that can move 2,000 cubic meters of material every hour is now on site, and “arrangements are also being made for high-capacity pumps to reduce water levels in the vessel’s empty front space and propulsion room. forward, “said the company Friday.
The stranded container ship Ever Dado, one of the largest container ships in the world, is seen after stranding in the Suez Canal, Egypt, on March 26, 2021
Mohamed Abd El Ghany | Reuters
Bernhard Schulte added that two additional tugs will arrive on Sunday to assist with the flotation operation.
Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management, noted that even after the ship is dislodged, the impacts will continue to be felt. Ships will arrive at ports simultaneously, creating new congestion, for example. Cargo schedules created months in advance will need to be reorganized with ships that are now in the wrong place.
Most importantly, there is a lack of visibility across the supply chain.
“The whole effect of dragging through the multi-hierarchy of the supply base – we won’t know that,” said Kent. “Companies don’t have visibility into their supply chain.” Although a company may know that it has a product stationed on a ship that is stopped, the impact of delays on the line is unknown.
A bulldozer tries to free the container ship Ever Dado, one of the largest container ships in the world, after stranding on the Suez Canal, Egypt, on March 25, 2021.
Suez Canal Authority | Reuters
The Suez Canal handles about 12% of global trade, making it an essential transit point. Each blocking day disrupts more than $ 9 billion worth of goods, according to Lloyd’s List, which means about $ 400 million an hour.
Some ship operators have already decided to redirect their ships, predicting that Ever Given will not be evicted anytime soon. Shipping ships around the Cape of Good Hope adds more than a week of shipping, while increasing costs.
“It’s a terrible mess,” said Anthony Fullbrook, president of the North American region of the OEC Group.
The disruption caused by the buildup in the Suez Canal comes at a time when global supply chains are already being affected by Covid-19.
“Equipment, space, everything is running at peak capacity … It is already melting little by little, and it will only get worse,” he added.