In the past few days, you must've read or heard about how a cargo ship has somehow got stuck in the Suez Canal, completely blocking the route through the famous waterway. Today let's talk about why this route is so important and what were and could have been the repercussions of this disastrous event.
If you've ever been interested in history and global conflicts, you must have heard of Suez Canal. Situated in Egypt, it is an artificial sea-level waterway connecting the Mediterranean Sea and the Red Sea. The canal derives its importance from its strategic location. It is the only route that directly connects the European waters with the Arabian Sea, the Indian Ocean, and the countries of Asia-Pacific, making it a portal between the East and the West.
If not for the canal, shipments wanting to travel between these locations would have to traverse the entire African Continent, through the Cape of Good Hope. This alternative route adds two extra weeks of travel time and additional costs, making the Suez Canal route the most time and cost-effective way of transport for shipments. The canal is responsible for the flow of around 12% of the global trade, seeing almost $9.6 billion worth of goods pass through it each day.
On 23rd March 2021, the canal was blocked by the ultra-large container ship EVER GIVEN, which is operated by the company Evergreen Marine. The 400-meter ship was en route to the Netherlands when strong winds allegedly blew the ship off-course and the ship ran aground. Upon running aground, the ship turned sideways, completely blocking the canal and halting the passage of all ships transiting through the route.
As you may have guessed, the impact of this event was massive, at least in the short run. The holdup cost the canal almost $14-15 million a day. At least 450 boats waited for the blockage to clear and continue their transit. And no matter whether they choose to wait for clearing of the seaway or transit through the Cape of Good Hope, it cost businesses. The delay that arose from this event increased the competition for the loading and unloading spaces at ports, decrease the availability of viable container ships and other water vehicles for western importers, and increase the probability that the companies would have to bear demurrage costs. The direct impact was felt as oil prices rose due to this event with the shipping rates for oil products almost doubling.
This blockage affected not only the global shipping industry but also the countless businesses across the globe, which are connected to the goods being transported through this route in one way or another.
All crew members of the cargo ship were Indians and Egyptian Suez Canal officials were of the view that the Ever Given blockade was caused due to technical human errors and not due to the weather. The crew members worked with all the parties and officials to refloat the vessel which was greatly appreciated.
After several attempts, the Suez Canal officials were able to refloat the vessel on the 29th of March. It caused international oil prices to slip by 2% and authorities started to work on clearing the blockade that was caused by this event.
SCA went on to share a video of a flotilla of tugboats blaring their horns in celebration. The vessel is now headed towards the Great Bitter Lake where it will be inspected, said the company that operates the ship.
Really good 👍🏻