A satellite image shows a stranded container ship once given 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 wedged in the Suez Canal, and the economic effects of the blockage – now on the fourth day – are starting to unfold.
White House press secretary Jen Psaki said Friday that the US is closely monitoring the situation. “We have provided US assistance to the Egyptian authorities to help reopen the channel … those talks are underway,” she said at a news conference, before adding that there could be “potential implications for energy markets.”
Oil prices skyrocketed on Friday amid speculation that the ship’s displacement could take weeks. West Texas Intermediate Crude Oil and Brent Crude Oil Futures each were up more than 4%. The gains come after prices fell on Thursday, despite the stalemate.
“Traders, with a change of mind, decided that the blockade of the Suez Canal is actually becoming more important to oil flows and supplies than they previously concluded,” said Paola Rodriguez-Masiu, vice president of oil markets at Rystad Energy.
A satellite image shows the Suez Canal blocked by the stranded container ship once given in Egypt on March 25, 2021, in this image obtained from the Twitter page of Director General of Roscosmos Dmitry Rogozin. Photo taken on March 25, 2021.
Roscosmos | Reuters
Of the 39.2 million barrels per day of crude oil imported via marine methods in 2020, 1.74 million barrels per day crossed the Suez Canal, according to data from research firm Kpler.
This represents less than 5% of the total flows, but as the build-up progresses, the effects increase.
Bernhard Schulte Shipmanagement, the ship’s technical manager, said a new attempt on Friday to re-float the freighter was unsuccessful.
A specialized piston capable of moving 2,000 cubic meters of material every hour is now on site, and arrangements are also being made for high-capacity pumps to lower water levels in the ship’s forward void and thruster room. , ” the company said Friday.
Stranded container ship Ever Given, one of the world’s largest container ships, 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 by Sunday to assist in the re-drifting.
Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management, noted that even after the ship is driven off, the effects will continue to be felt. For example, ships arrive in ports and at the same time new traffic jams arise. Cargo schedules created months in advance 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 domino effect through the multi-hierarchy of the supply base – we won’t know,” said Kent. “Companies have no visibility into their supply chain.” While a company may know that a product is on a ship that is being stopped, the impact of delays down the line is unknown.
An excavator attempts to free a stranded 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 transit point. Each blocking day disrupts more than $ 9 billion in goods, according to Lloyd’s List, which translates to about $ 400 million per hour.
Some ship operators have already decided to divert their ships, expecting the Ever Given not to be driven out anytime soon. Sending ships around the Cape of Good Hope yields more than a week of sailing, while costs are also increasing.
“It’s a terrible mess,” said Anthony Fullbrook, president of the OEC Group’s North American region.
The disruption caused by the backlog in the Suez Canal is because global supply chains are already under pressure from Covid-19.
“There is already a shortage of equipment, space, everything is running at peak capacity … It is already slowly melting, and this will only make it worse,” he added.