According to shipping data, an estimated an estimated $9.6bn of goods each day is being held up by the stranded Ever Given mega-container ship in the Suez Canal since Tuesday. That is equivalent to $400m an hour in trade along the waterway which is the most critical water passageway between the East and West.
The value of the westbound traffic through canal is about $5.1bn a day with an estimated daily traffic of around $4.5bn, according to data from shipping expert Lloyd’s List.
According to salvage companies, it could take weeks before the stranded ship could be salvaged and the canal made free for traffic.
One of the biggest container vessels of the world, the Ever Given vessel is operated by the Taiwanese company Evergreen Marine and has a length of four football pitches. The 200,000-tonne ship is capable of carrying 20,000 containers.
Other ships trying to pass through the Suez Canal have been blocked because of the stranded ship.
With about 12 per cent of global trade moving through it, the Suez Canal is one of the busiest trade routes in the world and separates Africa from the Middle East and Asia.
There are currently more than 160 vessels waiting at either end of the canal according to Lloyd’s List tracking data, which include 41 bulk carriers and 24 crude tankers.
In addition to oil, mostly consumer products such as clothing, furniture, manufacturing components and car parts are ferried through sea routes.
“We’re hearing reports now that shipping companies are starting to divert their ships around the southern tip of Africa, the Cape of Good Hope, which adds about 3,500 miles to the journey and up to 12 days,” Guy Platten, the secretary general of the International Chamber of Shipping, said in a television interview to the BBC.
Since the ship was appeared to be “hard fast aground”, therefore it was taking much longer to free the vessel from the bank and the process of salvaging the vessels was more complicated than rescuers had initially anticipated, he said.
Explaining that consumers would ultimately bear the cost, Platten added there would be “some major real-world effects on the supply chain”.
The Ever Given had been scheduled to arrive in the port of Felixstowe in early April.
With the rapid expansion of global trade, the size of container ships have almost doubled in size in the past decade which has made the task of moving them very difficult when such huge vessels get stuck.
“What are we thinking? Have vessels gotten too large? Containers being jettisoned overboard, delayed transits due to terminal congestion and let us not forget the long line of vessels at many ports waiting for a berth,” said Jon Monroe, who runs his own ocean transportation consultancy.
There will be addition in delays with its impact on supplies, said BIMCO, an international shipping association.
“For each day of delay my thought is it will take two days to undo the delays,” said Alan Baer, president of logistics provider OL USA. “Right now three days creates six days of ongoing delays. I’m not sure this is a perfect formula, but it will be close,” he said.
In addition to delaying thousands of containers loaded with consumer items, the stranded ship has also tied up empty containers which are needed for exports.
If the delays are short, most companies will absorb the extra delay in transit times. But salvage officials said the congestion could last days or even weeks, in a blow to global supply chains already strained by the Covid-19 pandemic.
Some companies will be considering flying replacement merchandise for higher value products, or transporting them via trains.
Two major shipping companies, Maersk and Hapag-Lloyd, said they are looking into options to avoid the Suez Canal.
Egypt’s Suez Canal Authority (SCA) said it was doing all it could to refloat the ship with tug boats, dredgers and heavy earth-moving equipment.
Kitack Lim, secretary general of the International Maritime Organisation, said: ” I am aware of the implications of the temporary closure of the canal, and I ask for patience from stakeholders across the supply chain as everyone works to ensure that the ship, its crew, its cargo and the environment remain protected.”
(Adapted from BBC.com)