The blockade of ships in the Suez Canal begins to affect the world economy

A satellite image shows an Ever Given container ship stranded after it ran aground in the Suez Canal, Egypt, on March 25, 2021.

CNES Airbus DS | Reuters

The Ever Given, one of the world’s largest container ships, is still trapped in the Suez Canal, and the economic effects of the blockade, now in its fourth day, are beginning to manifest themselves.

White House press secretary Jen Psaki said Friday that the United States is closely monitoring the situation. “We have offered US assistance to the Egyptian authorities to help reopen the canal … those talks are ongoing,” he said during a news conference, before adding that there could be “some potential impacts on energy markets.”

Oil prices rose on Friday amid speculation that dislodging the ship could take weeks. Futures for West Texas Intermediate crude and Brent crude each advanced more than 4%. The gains come after prices fell on Thursday, despite stagnation.

“Traders, in a change of mind, decided that the blockade of the Suez Canal is actually becoming more significant for oil flows and supply deliveries than they had previously concluded,” said Paola Rodríguez-Masiu, vice president. oil markets of Rystad Energy.

A satellite image shows the Suez Canal blocked by the beached container ship Ever Given in Egypt on March 25, 2021, in this image taken from the Twitter page of Roscosmos CEO Dmitry Rogozin. Picture taken on March 25, 2021.

Roscosmos | Reuters

Of the 39.2 million barrels a day of crude imported by sea in 2020, 1.74 million barrels a 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 spreads, the impacts increase.

Bernhard Schulte Shipmanagement, the ship’s technical manager, said another attempt on Friday to refloat 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 ship’s forward void space and hall. of the bow thruster, “the firm said on Friday.

The beached container ship Ever Given, one of the largest container ships in the world, is seen after it ran aground, 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 in the refloating operation.

Douglas Kent, executive vice president of strategy and partnerships for the Association for Supply Chain Management, noted that even after the ship is evacuated, the impacts will continue to be felt. Ships will arrive at ports simultaneously creating new traffic jams, for example. Freight schedules created months in advance will need to be rearranged with ships now in the wrong place.

More importantly, there is a lack of visibility throughout the supply chain.

“The whole ripple effect through the multiple hierarchy of the supply base, we’re not going to know that,” Kent said. “Companies don’t have visibility into their supply chain.” While a company may know that it has a product on a ship that is detained, the impact of delays in the future is unknown.

An excavator attempts to free the beached container ship Ever Given, one of the world’s largest container ships, after it ran aground in the Suez Canal, Egypt, on March 25, 2021.

Suez Canal Authority | Reuters

The Suez Canal handles about 12% of world trade, making it an essential crossing point. Each lockout day disrupts more than $ 9 billion in goods, according to Lloyd’s List, which translates to about $ 400 million an hour.

Some ship operators have already decided to reroute their ships, anticipating that Ever Given will not be evicted soon. Shipping boats around the Cape of Good Hope adds more than a week of sailing, while increasing costs.

“It’s a terrible disaster,” said Anthony Fullbrook, president of the OEC Group’s North America region.

The disruption caused by the backlog in the Suez Canal comes as global supply chains are already strained by Covid-19.

“There is already a shortage of equipment, space, everything is running at maximum capacity … It is already slowly melting, and this will only aggravate it,” he added.


Source link