Reeling from the blockage in the Suez Canal, Reuters report that shipping rates for oil product tankers have nearly doubled this week, while oil prices climbed on March 26.
Report from Cairo reveals brand-new Kia automobiles, cases of Heineken beer, live animals and billions of dollars of crude oil and other commodities remained stranded in the Suez Canal on Friday, as tugboats and dredgers tried to free a grounded container ship that has come to symbolize the perils of a global economy that relies on depends on being able to send goods around the world in larger and larger vessels.
Experts say the giant cargo ship wedged across the Suez Canal is blocking shipments worth an estimated $9.5 billion per day from reaching their destinations. The shipments include food and oil and the delay in getting those goods to market will have ‘enormous’ impact on the world economy.
At least 150 ships are now stuck in the logjam caused by the 200,000-ton cargo ship Ever Given which ran aground in the narrow channel on Tuesday. Goods worth $29 billion are already held up.
The price of crude oil shot up 6 percent on Wednesday, reversing months of often-record falls caused by the coronavirus pandemic.
24 March 2021, Egypt, Suez: A ship sails along the waterway of the Suez Canal after the resumption of the navigation traffic following the partial refloating of the “Ever Given”, a container ship operated by the Evergreen Marine Corporation. Photo: Ahmed Shaker/dpa (Photo by Ahmed Shaker/picture alliance via Getty Images)
But the true cost of the disaster will be far higher as delays to vital goods cause losses at firms around the globe. Kate Harding, chief executive of trade data firm Coriolis Technologies, warned today that the risks to global trade are ‘absolutely enormous’.
If the canal cannot be quickly unblocked then shipping firms will have no choice but to route their vessels around the Cape of Good Hope at the tip of Africa – a route that adds 14 days and 5,000 nautical miles to the journey.
That could mean higher prices for goods shipped to Europe from Asia – including cars, construction materials, and coronavirus PPE – as shipping companies increase their charges to cover the cost of taking longer routes.
Meanwhile, the CEO of a team of Dutch experts brought in to help the rescue operation warned that the canal could be closed for ‘weeks’, with workers forced to unload cargo containers stacked some 100ft high on the ship’s deck if attempts to dig it out fail.
Peter Berdowski, CEO of Dutch company Boskalis, compared the ship to ‘an enormous beached whale’ as he warned workers might have to start offloading cargo in order to reduce its weight and get it floating again.
‘We can’t exclude it might take weeks, depending on the situation,’ he told Dutch media. ‘It’s an enormous weight on the sand. We might have to work with a combination of reducing the weight by removing containers, oil and water from the ship, tug boats and dredging of sand.’
He spoke as canal workers, who had paused work overnight during low tide, this morning restarted efforts to free the ship – which is about as long as the Empire State Building is tall – from where it has lodged diagonally across the waterway.
Excavators are trying to dig out the vessel’s dolphin-nose bow which has lodged in the eastern wall of the canal, while dredgers and tugboats try to shift its stern which is jammed against the western side.