A satellite image shows a stopped container ship that had never run aground in the Suez Canal, Egypt, on March 25, 2021.
CNES Airbus DS | Reuters
Ever Give, one of the largest container vessels in the world, is still coined in the Suez Canal and the economic effects of the blockade, which is now in its fourth day, are beginning to unfold.
White House press secretary Jen Psaki said Friday that the U.S. is monitoring the situation closely. “We have offered US help to the Egyptian authorities to help reopen the channel … these talks are ongoing,” he said during a news conference, before adding that there could be “some possible impacts on energy markets “.
Oil prices jumped on Friday amid speculation that the ship’s displacement could take weeks. West Texas crude futures and Brent crude each advanced more than 4%. Gains come after prices fell on Thursday, despite the lockout.
“Traders, in a change of heart, decided that the blockade of the Suez Canal is increasingly important for oil flows and supply supplies than they concluded earlier,” said Paola Rodriguez-Masiu, vice president of Rystad Energy’s oil markets.
A satellite image shows the Suez Canal blocked by the stranded container ship never donated to Egypt on March 25, 2021, in this image obtained from the Twitter page of Roscosmos CEO Dmitry Rogozin. Photograph taken on March 25, 2021.
Roscosmos | Reuters
Of the 39.2 million barrels per day of crude imported by maritime methods in 2020, 1.74 million barrels a day passed through the Suez Canal, according to research firm Kpler.
This represents less than 5% of the total flow, but as an accumulation is achieved, the impacts increase.
Bernhard Schulte Shipmanagement, the ship’s technical manager, said another attempt to re-float the carrier failed on Friday.
A specialized suction dredger that can change 2,000 cubic meters of material every hour is already in place and “high-capacity pumps are also being prepared to reduce water levels in the empty space ahead of the ship and the bow thruster room, “the firm said Friday.
A stranded container ship Ever given, one of the largest container vessels in the world, is seen after stranded 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 help with the refloating operation.
Douglas Kent, executive vice president of strategy and alliances for the Supply Chain Management Association, noted that even after the ship is evacuated, the impacts will continue to be felt. Ships will simultaneously arrive at ports creating new traffic jams, for example. Cargo schedules created months in advance will need to be remodeled with ships now sitting in the wrong place.
More importantly, there is a lack of visibility throughout the supply chain.
“The whole knock-on effect across the multi-hierarchy of the supply base, we won’t know,” Kent said. “Companies have no visibility in their supply chain.” While a company may know it has a product sitting on a stationary boat, the impact of delays on the line is unknown.
An excavator is attempting to release the stranded container ship Ever given, one of the largest container vessels in the world, after it ran aground in the Suez Canal, Egypt, on March 25, 2021.
Suez Canal Authority | Reuters
The Suez Canal manages about 12% of world trade, making it an essential crossing point. Each block day alters assets worth more than $ 9 billion, according to Lloyd’s List, which translates to about $ 400 million per hour.
Some boat operators have already decided to re-route their ships, anticipating that the Ever Give will not be evacuated soon. Sending boats by the Cape of Good Hope adds more than a week of sailing, while increasing costs.
“It’s a terrible mess,” said Anthony Fullbrook, president of the OEC Group’s U.S. region.
The disruption caused by the Suez Canal delay is occurring as global supply chains are already under stress by the Covid-19.
“There is already a shortage of equipment, space, everything is working at full capacity … It is already slowly melting and that will only make it worse,” he added.