A multinational rescue team including the US navy has been called in to try and free a container ship that is currently blocking the Suez Canal. The waterway is a vital part of global trade, and the blockage has sent shipping rates skyrocketing. Unless the efforts made to dislodge the massive container ship are successful, then global supply chains could be seriously affected in the coming weeks.
Freeing the container ship
The Japanese-owned Ever Given ran aground in the Suez Canal last Tuesday. The fact that the Even Given is about the length of the average skyscraper has meant that efforts to free it have been treacherous.
The task has been made all the more tricky as a result of adverse weather conditions and the ongoing pandemic restrictions over movement. There are currently efforts underway to remove 20,000 cubic meters of sand around the ship. Once the dredgers have completed this task, then work would begin in tugging the Ever Given back to safety.
There’s still little idea of how long this mammoth project will take, but it’s widely expected to be weeks rather than days. All of which shows just how precarious the dependence on global trade has become.
Shipping costs hiked
The costs of shipping goods via oil product tankers has quadrupled in the three days since the container ship ran aground. The price of rerouting a container around the bottom of Africa rather than through the Suez Canal would cost an estimated $300,000 in fuel alone. This has been a bitter blow for global trade that has already suffered disruption and delay due to the ongoing pandemic.
The Suez Canal is a hugely important route for a massive quantity of goods that travel between Europe and Asia. But with the route through the Egyptian territory being blocked, it has meant that fuel shipping rates between the Black Sea and the Mediterranean have jumped by as much as 70%.
It’s widely expected that costs could spiral out to affect other exports in the region if the canal is forced to remain closed in the coming weeks. Already the markets in gas oil and diesel have been hit by the blockage. Plus several US firms are already facing difficulties due to the disruption. For example, the US machinery producer Caterpillar Inc has said that shipment delays might require the company to airlift in essential parts and products instead.
Current shipping data suggests that there are now over 30 oil tankers stuck on either side of the Suez Canal. With these massive tankers effectively stranded along the Egyptian coast, there are fears about how this could affect global markets still reeling from the effects of the Covid-19 pandemic.
It’s hard to put a figure on how much this blockage could cost the world. But with reports suggesting that around $10 billion of oil flow through the Suez Canal every day, it hints at what a truly global problem this is becoming.