The blockage of the Suez Canal by the freighter Ever Green had just been freed at the time of this writing.
The Suez Canal, a 120-mile man-made waterway in Egypt that connects the Mediterranean Sea to the Red Sea, is one of the most important pathways for international trade. It’s been operational since the late 1860s and currently accounts for about 12 percent of the world’s trade by sea. On a typical day, some 50 large container ships pass through it. On an annual basis, some 20,000 boats pass through it.
However, for the last week, a 220,000-ton vessel that measures about a quarter-mile in length had been lodged in the Suez Canal, blocking it completely from other oceanic traffic. This ship, the Ever Given, was grounded by strong winds — and despite repeated efforts of tugboats and dredging boats thus far, it remained stuck for about a week. If the ship were to become damaged and break apart during any sort of attempted removal, the Suez would have been inoperable for an even greater extended period of time. Even with the blockage cleared, the impact on global trade is substantial.
Consequences of Long-Term Suez Blockage
Like we said earlier in this piece, the Suez is responsible for about 12 percent of the world’s oceanic shipping. Some of the trickle-down effects include higher shipping rates, an increase of energy commodities and an increase in inflation, per experts. It’s not great news for the global economy and the global supply chain after an already difficult year on the heels of the COVID-19 pandemic.
What Could Be Impacted?
A lengthy delay could literally impact everything — from clothing to electronics to even food and oil prices. In addition to adding perhaps as much as 2 more weeks to standard shipping times, the costs of said goods are all likely to increase to account for a longer time at sea as captains have to set alternate routes to get the product to port. Experts say that the biggest immediate impact will consist mostly of trade from Europe and Asia. Keep in mind that there are plenty of ships in and around the canal already waiting to resume their trade routes as well.
Even with the vessel cleared, goods will still be arriving to port late and it will likely be some time before global trade can catch up.