Cargo Ship Stranded In The Suez Canal: What Are The Economic Consequences Of Stopping Traffic?

A giant container ship is still blocking this seaway, where billions of dollars' worth of goods usually pass every day.

An excavator facing a titanic ship. The photograph of this improbable duo, widely disseminated on social networks, can make you smile in the face of the immensity of the challenge that this articulated arm tries to take up.

Since its grounding on Tuesday March 23, the Ever Given has still been blocked across the Suez Canal, preventing the full resumption of maritime traffic in the region.

The sinking of the container ship could have a pharaonic cost. Because by blocking this very busy seaway, the 220,000-ton, 400-meter-long ship halted the functioning of part of world trade. Explanations.

Dozens of boats at a standstill
The interruption of traffic on the Suez Canal immediately created a traffic jam. According to the Lloyd's List naval review, more ships per day use this route normally.

Since Tuesday, the Suez Canal Authority has reopened an older part to divert some ships, but this passage can only accommodate smaller boats.

In the meantime, 46 bulk carriers and dozens of tankers and container ships too large to take this emergency route were immobilized on Friday March 26 at the two entrances to the canal, awaiting a restart of traffic, according to Lloyd's List. But this one could be late ...

If the owner of the Ever said he was hopeful that the ship would be released on the evening of Saturday, March 27, the company responsible for refloating the container ship instead spoke of "several days or even weeks" of work.

Delays in delivery to be expected

Every day, 5.1 billion dollars of goods pass through the Suez Canal towards Europe (4.3 billion euros), according to the magazine Lloyd's List.

And towards Asia, it is 4.5 billion dollars (3.8 billion euros) of goods which are transported daily. This shows the cost of stopping traffic on this highly strategic seaway.

The delay caused by the blockade led the shipping giant Maersk and the German Hapag-Lloyd to consider diverting its ships to pass through the Cape of Good Hope. Or a detour of 9,000 kilometers, which would extend delivery times by ten days. At least four tankers are considering doing the same. But such a change of trajectory would have a significant fuel cost.

"It may be that we receive things a little later than expected and that European exports lag a bit," said Paul Tourret, director of the Higher Institute of Maritime Economy, to franceinfo. Car "the Suez Canal brings everything made in China," he says.

Towards a possible Fuel Price Hike?

News of the lockdown caused oil prices to jump up to 6% on Wednesday, before falling back on Thursday. Normally, thousands of barrels of oil, mostly from the Middle East, travel through the Suez Canal every day.

The traffic represents "about 10%" of European oil imports, estimates Paul Tourret, interviewed by France 3 this time.

If it lasts, the blockage could even have an impact on the price of fuel in France and Europe. "When it lacks a little fluidity [in the transport] of black gold, it has repercussions on the prices at the pump", explains the specialist. For the moment, no increase has yet been noted in the price of gasoline and diesel.

An impact in multiple areas

Almost 10% of international maritime trade passes through the Suez Canal. Like oil, the prices of various products could therefore increase if the situation were to persist: "There may be shortages", experts warn.

Sea freight rates could also skyrocket after the car accident and the number of available carriers could be reduced in the coming weeks, warns Lloyd's list.

In addition, the blockage will weigh on the Egyptian economy: the Suez Canal brought the country more than $ 5 billion in 2020.

Keywords : Transit traffic ship stuck container ship evergreen egypt cargo cargo ship panama canal the suez ever given stuck in suez crisis