A mega-container ship that is costing billions in lost revenue in trade, Ever Given now enters its fifth day* as a stranded vessel disrupting international trade moving through the Suez Canal every day. Alvin Thomas writes…
While it may be a few weeks before accurate data expounding the mishap is published, Lloyd’s List – a data compiler in the shipping industry – estimates that the container ship is costing upwards of US$400mn in an hour in trade, based on the value of goods passing through the Suez Canal per day.
The grounded 20,000 teu (twenty-foot equivalent unit) Ever Given could soon be moved by tug boats in the massive rescue operation that is ensuing at the port; though, some reports state that the ship could spend upwards of a week wedged in position.
At the time of publishing this story, the ship’s rudder and propeller had been freed from the dredge.
But, with lines of container ships (326 in total as of March 28) waiting to pass through the canal and a backlog of ships waiting to be rerouted, experts state that the disruptions could be felt throughout the second quarter of 2021.
German insurance company, Allianz, however, stated in a report that the Suez Canal disruption could cost anywhere between US$6bn and US$10bn per week. It also shows that each week of immobilisation shaves some 0.2 to 0.4 per cent of points off the annual trade growth.
Ever Given, which is a Golden-class container ship, ran aground in the Suez Canal in Egypt on Tuesday [23 March, 2021] measures at 400 metres in length. The mishap reportedly occurred when the vessel was buffeted by a sandstorm and strong winds upwards of 74kph (40 knots).
Albeit, authorities state that the obstruction – that led to the ship running aground on one of the canal’s banks – could have been facilitated by “technical or human errors”.
Why is the Suez Canal important?
The Suez Canal, which separates Africa and Asia, remains one of the busiest trade routes in the world. Estimates show that up to 12 per cent of the world’s total global trade moves through the canal. This includes some 5 and 10 per cent of the world’s energy shipments, including crude oil, natural gas, and refined oils.
Impact on oil prices
Lloyd’s List details that 1.9mn barrels of crude oil pass through the Suez Canal each day. This constitutes 7 per cent of all seaborne oil trade in the world. A disruption in the supply chain has resulted in Syria having to ration fuel to safeguard its dwindling oil supplies.
But experts in the oil and gas sector say that the disruption will not likely translate to higher oil prices, mostly owing to the weak demand for non-renewable energy resources fronted by the COVID-19 pandemic. The situation, however, remains volatile as Ever Given continues to put a complete block on international trade through the canal; forcing ships to be redirected, which in turn has led to an unprecedented increase in operational costs.
