Ship stranded in the Suez Canal: why the incident could worsen global economic crisis
The Suez Canal is one of the main economic arteries in the world, since more than 12% of world trade passes through it
The Suez Canal, in Egypt, is one of the main sea crossings in the world for the transport of goods and raw materials.
Since Tuesday, the passage through the channel has been blocked by the freighter Ever Given, which ran aground due to a technical failure and raises concern around the world for blocking the passage of other ships.
"If the Suez Canal remains blocked for another 3 or 5 days, it will start to have very serious global ramifications," Niels Madsen, vice president of products and operations at Danish consultancy Sea-Intelligence, told Reuters.
It.s value lies in the fact that it offers cargo ships a route between Asia, the Middle East and Europe without having to bypass the Cape of Good Hope, in the extreme south of Africa.
This allows ships to save almost 9,000 kilometers each way, reducing the distance by 43%, according to data from the World Maritime Transport Council (WSC), an institution that represents the main shipping companies.
2. A daily value of more than R $ 50 billion
The line of ships waiting to cross the channel on Wednesday includes more than 40 cargo ships, transporting staple foods, from grains and cereals to so-called "dry" products like cement, and 24 tankers, according to data from Lloyd's List Intelligence consultancy.
There were also eight ships carrying cattle and a water truck, according to Bloomberg.
The Suez Canal is one of the so-called "bottlenecks" on the planet, as defined by the United States Energy Agency (EIA, its acronym in English), "essential for global energy security" and in the supply of raw materials and goods.
In fact, almost 19,000 ships pass through the channel each year, transporting millions of tons of goods.
Lloyd's List estimates that the daily value of containers passing through the channel is US $ 9.5 billion (more than R $ 53 billion), of which about US $ 5 billion (R $ 28.2 billion) goes to the west and another US $ 4.5 billion (R $ 25.4 billion) to the east.
3. Vital for supply chains
The channel is vital to supply chains around the world, analysts say, so blocking it can have significant consequences.
The first problem can be found in port congestion, says Lars Jensen, an analyst at consultancy Sea Intelligence.
The Ever Given ship (owned by Evergreen) has been stuck in the Suez Canal since Tuesday, impeding the normal flow of ships through it
"If we assume that the ships are full [...], that means [that are] 55 thousand TEU (containers) per day of cargo from Asia to Europe [via channel]. The current forecast is that the channel will take about two days to unblock, which will cause a delay of 110 thousand TEU of cargo, which will cause a peak of loading in the main ports of Europe ", explains the consultant, in an analysis he published on the subject.
"In other words, it increases the risk that we will see congestion at European ports within a week," he predicts.
What can that mean? That the supply of "basically everything you see in stores" can be "affected", the consultant told NBC.
4. Impact on oil and other commodity prices
In the opinion of Salvatore R. Mercogliano, a specialist in maritime affairs and a professor of history at Campbell University in North Carolina (USA), the blockade may have "huge ramifications for world trade".
"Every day that the canal closes, container ships and oil tankers do not deliver food, fuel and manufactured products to Europe and no goods are exported from Europe to the Far East," he said in a conversation with the BBC.
The blockade may have "huge ramifications for world trade", warn experts
The Suez Canal is "particularly important as a means of transporting oil and liquefied natural gas, allowing remittances to reach Europe from the Middle East," says Theo Leggett, BBC business correspondent.
In fact, 5,163 tankers passed through the channel last year, according to official channel data, moving nearly two million barrels of oil a day, estimates Lloyd's List Intelligence.
According to EIA data, total oil flows through the Suez Canal and the SUMED pipeline (built in the Gulf of Suez itself) accounted for about 9% of the total world oil traded by sea and 8% of liquefied natural gas.
Due to their importance and the uncertainties generated, world oil prices rose more than 6% on Wednesday after traffic was suspended on the canal, although they fell slightly again on Thursday.
The markets, therefore, still await the development of the events:
"Obviously, the longer this interruption lasts, the more likely it is that refiners and buyers will have to turn to the spot market to guarantee supplies from elsewhere," says ING's research department.
"The incident showed what can go wrong when the new generation of large ships, like Ever Given, has to go through narrow channels," say analysts.
Time will be the key to measuring impact over time, according to analysts.
"The effect is likely to be weak and transient. But if the blockade lasts more than a few days, it can impact the price and in a more lasting way," says Bjornar Tonhaugen, from Rystad's cabinet, to the AFP agency.
What about the rest of the products and goods?
"There are millions of dollars worth of commodities on the other ships, and if the channel isn’t cleared quickly, they’ll be looking for other routes, which means more time, more fuel and more costs that can be passed on to consumers," said Ian Woods, maritime trade attorney at London firm Clyde & Co in an interview with NBC.
While analysts and markets eagerly observe the resolution of the incident, there are voices that are already warning of the lessons that can be learned from it.
"It's a nightmare scenario," said the BBC's Leggett.
"The incident showed what can go wrong when the new generation of large ships, like Ever Given, has to pass through narrow channels," he notes.
Although some parts of the canal were expanded as part of a major modernization program in the middle of the last decade, "it remains difficult to navigate," he says, and accidents may occur in the future with even more serious consequences.
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