The Suez Canal has been blocked after one of the world’s largest container ships ran aground, severing a vital trade artery and threatening to disrupt global shipments for days.
The Ever Given container ship, which is almost as long as the Empire State Building is tall, is wedged across the southern end of the canal, with tug boats engaged in a frantic effort to free it.
Taiwan-based Evergreen Marine, which operates the vessel, said on Wednesday that the ship had entered the Suez Canal from the Red Sea at 8am eastern European time on Tuesday.
“At about six nautical miles from the canal’s southern end, the ship is suspected to have met with a sudden gust of strong wind, which caused the ship’s body to veer from its course and accidentally run aground,” Evergreen said in an emailed statement.
Every day, about 50 vessels sail through the 120-mile length of the Suez Canal, which was built between 1859 and 1869 to connect the Mediterranean to the Red Sea and Asia.
Samir Madani at TankerTrackers said that within hours of the blockage, about 10m barrels of crude and petroleum product shipments had backed up near the north and south entrances to the canals.
Apart from crude flowing from the Middle East to Europe and North America, the canal has become a large transit route for oil from Russia to Asia in recent years.
“The canal is a key chokepoint for global trade,” Madani said. “If they can free the vessel quickly then the impact will be minimised but any prolonged blockage would have severe consequences, from affecting oil prices and shipping rates to forcing container vessels to take the much longer route around Africa.”
Total oil flows through the canal and its associated Sumed pipeline system accounted for almost 10 per cent of global seaborne traded petroleum in 2018, according to the US Energy Information Administration. About 8 per cent of liquefied natural gas trade also passed through the canal that year, the EIA said.
Brent crude, the international benchmark, ticked up around 1 per cent to $61.35 a barrel in London on Wednesday. Prices had been under pressure earlier this week amid rising concerns over demand caused by new social restrictions to combat coronavirus in Europe.
The canal is also a key artery for consumer goods and bulk raw materials. Almost 50 per cent of the vessels that passed through the canal in February were container ships, according the Suez Canal Authority.
Osama Rabie, head of the Suez Canal Authority, said efforts were under way to float the vessel, but gave no timeline for when it might be freed.
Brokers and shipping analysts said that the blockage threatened to cause backlogs at ports in Europe for days and exacerbate the shortage of containers in Asia that has led to surging freight rates.
“It’s a massive problem as literally everything from Asia to Europe comes through there,” said Philip Edge, chief executive of UK freight forwarder Edge Worldwide Logistics, who has goods held up.
The industry is closely watching how quickly the situation is resolved with the current expectation for it to take at least two days.
“The longer this lasts, the worse it gets,” said Lars Jensen, chief executive of Seaintelligence Consulting.
Jensen added that “this has the potential of creating bottlenecks in European ports” next week, as delayed vessels idle at ports at the same time as those arriving on time from elsewhere, while also risking delays to the return of desperately needed containers to China.
The potential for further disruption comes as global shipping is stretched to its limits by a virus-induced surge in orders for goods at a time when containers were in the wrong place as a result of cuts to service in the early days of the pandemic.
As a result, the cost of shipping goods from Asia to Europe hit a record high in recent months and global freights are already about three times the level of a year ago.
Peter Sand, chief shipping analyst at Bimco, said that there were no signs yet of vessels being redirected around the Cape of Good Hope but he was “sure we will see some redirection due to risk management” by shipping companies.
The Panama-flagged Ever Given vessel, which was launched in 2018, is just under 400m long and 59m wide and was en route to Rotterdam, according to the Marine Traffic vessel tracking website.
A picture of a digger attempting to free the ship was posted on Instagram by a seafarer reportedly on the ship behind the Ever Given.
Julianne Cona, who posted the picture, is listed on LinkedIn as a second assistant engineer from New York.
“Ship in front of us ran aground while going through the canal and is now stuck sideways,” Cona wrote. “Looks like we might be here for a little bit . . . ”
Additional reporting by Kathrin Hille in Taipei
Source: Economy - ft.com
