Opinion

Mega-ship blockage of Suez canal might last for weeks

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The mega-ship Ever Given ran aground in the Suez Canal on March 23rd, in kilometer 151, blocking the canal’s passage on both ways. Both the vessel’s bow and stern are grounded in the borders of the canal. Special rescue teams from the Netherlands and Japan are helping to devise a plan to refloat the mega-ship. Unloading the vessel might be necessary to help re-floating the vessel, in which case the operation might last for weeks causing a disruption in the global cargo vessel traffic.

The mega-ship Ever Given ran aground in the Suez Canal last Tuesday (March 23rd), and it completely blocked the passage in the Canal. The mega-ship is one of the longest ships currently in operation, with 400m in length and a 220 thousand MT cargo capacity. The grounding occurred at 7:40 AM in local time at kilometer 151, where the Northbound vessel had a blackout which caused the grounding. Other sources report that the grounding occurred during a sand storm that impaired visibility and strong wind of 40 knots (74 km/hr) affected the control of the vessel. The Panama-registered Ever Given was on its way from China to Rotterdam port in the Netherlands.

Initially, the Suez Canal Authority (SCA) has been working on dislodging the vessel by excavating its grounded bow on the canal’s borders. SCA informed that the Ever Given would be afloat by the next day (March 24th). However, the efforts were unsuccessful.

Evergreen Marine Corp from Taiwan, who rented the vessel, announced that rescue teams from the Dutch company Smit Salvage and the Japanese company Nippon Salvage were summoned to redesign a plan to re-float the vessel. The rescue teams will be working alongside SCA and the vessel’s captain to devise a plan.

Image: Amount of vessels that awaits for unlocking of the Suez Canal

Source: Marine Traffic

According to a dredging specialist who sent a crew to help re-float the vessel, both stern and bow are grounded on the canal’s borders, and the weight of the cargo ship further adds to the grounding. The unloading of containers might be necessary to reduce its total weight and free the vessel. This process can take weeks and cause a global disruption in logistics. Another hope is the high tide at its peak on Sunday (28th) or Monday (29th), where an extra 46 cm will be added to the depth of the canal and enable maneuvers that can free the vessel.

Image: Ever Given Vessel bow aground in Suez CanalSource: SCA

Importance of the Suez Canal

The Suez Canal is the main passage for trade between Asia and Europe, connecting the Mediterranean Sea and the Red Sea, where 12% of the total global trade is concentrated. On average, 50 vessels went through the canal every day in 2019, representing one-third of the global cargo vessel traffic. The canal also concentrates the traffic of the majority of oil transported by sea.

It is estimated that the canal blockage will interrupt daily traffic of about USD 5.1 billion to Europe and USD 4.5 billion to Asia, totaling USD 9.6 billion.

The alternative for the Europe-Asia route would be contouring Africa through the Cape of Good Hope, which would double the distance between the ports in the Gulf and London and adding an extra two weeks to the freight time.

Oil prices go up 6% after news on blockage in Suez Canal

After a series of price reductions on oil due to the reduced consumption caused by lockdowns, especially in Europe, to reduce the spread of COVID-19. There was a hike in the oil prices the day after the mega-ship Ever Given has blocked the Suez Canal. The future contract of Brent oil for May increased by 5.95%, achieving USD 64.41 per barrel, and the US oil for the same period had a 5.92% increase reaching USD 61.18 per barrel.

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