BUSINESS + POLITICS

Sink or swim? Examining the efficiency of Egypt’s Suez Canal

container ships
Emily Murphy

10th April 2021

 

On March 29th 2021, it was reported that after six days the ‘Ever Given’ had been freed from Egypt’s Suez Canal. Due to extreme weather conditions, the cargo ship became lodged and blocked the shipping lane. Despite the plethora of memes and the widespread amusement of the event, this posed an enormous threat to the global economy and has forced us to question the resilience of our international trading routes.

 

On Tuesday 23rd the Ever Given, a ship owned by the transport company Evergreen ran aground in the Suez Canal, one of the world’s most critical shipping channels. The vessel, travelling from China, which is 400-meters long, or the length of the Eiffel Tower, was carrying 20,000 containers, each of which can weigh up to 70,000 lbs. This blocking of the canal caused a backup of 369 ships destined to transit the waterways. The Suez Canal is incredibly important for the global economy and shipping with roughly 12% of the world trade passing through the choke point per day, including 10% of the world’s oil in 3 million barrels per day. Experts say that 9.6 billion dollars of trade was backed up in the Suez Canal itself or on either side in the Red and the Mediterranean Sea. At least thirteen of the ships waiting to move through the Suez Canal were carrying livestock, including the Nabolsi, which left Colombia on March 6th and was halted at the mouth of the canal. In a statement, Egypt’s Ministry of Agriculture said that three veterinary teams were sent to examine the animals on board the ships and to provide fodder if needed.

 

The Ever Given has now been freed and tugged to the Great Bitter Lake for inspection. This has allowed traffic to resume through the waterway. This does not however mean that shipping can return to normal immediately. The 369 ships waiting to move through the canal include oil tankers, cargo ships and liquefied natural gas vessels. With only 100 ships being able to pass through the canal each day, according to the Suez Canal Authority, it took three days to clear the backlog and the effects of this may be felt for months. The Ever Given has only increased the strain on an already fragile system. Due to the pandemic, there have been additional delays on the delivery of products due to customs and contagion concerns. With factories around the world waiting on essential components from ships in the canal before they can dispatch their products, these hold-ups will only increase. The delay will also undoubtedly cause oil and gas prices to spike.

 

“The blocking of the canal has raised questions about the efficiency of the route. The 193km long canal was constructed between 1859 and 1869, to connect both seas on either side and to shorten the distance between Asia and Europe. Since its opening, traffic through the canal has only increased, with cargo ships increasing in size by approximately 1,500 percent. This is making navigation through the high-traffic bottleneck increasingly difficult.”

A conversation has recently been revived about alternative routes and one suggestion is to traffic ships around the Cape of Good Hope in South Africa. This is an issue for multiple reasons, the extended journey time will slow down the supply chain and create a lag in products reaching consumers adding additional expense to the couriers which will be pushed along the distribution channel. There is also the potential risk of ships being attacked by pirates, which has at times resulted in hijacking and the deaths of crew members. The melting ice in the Arctic has led to the suggestion of a Northern passage, which Russia has been pushing for years. Moscow is planning on using the route to export oil and gas to markets in Asia, and the Russian weather service has said that in a few years the route will be essentially ice-free in the summer months.

 

It seems that no matter how the issues highlighted by the blockage are resolved, we will be continuing to discuss the efficiency of the Suez Canal for years to come.

 

 

Featured photo by CHUTTERSNAP on Unsplash

 

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