Robert HARNEIS -TDO- (FRANCE)- International trading companies are rerouting cargo away from the Suez Canal as the Evergreen blockage is likely to take weeks to clear.
On 26 March, seven tankers carrying liquefied natural gas (LNG) were diverted away from the canal, three of them to the Cape of Good Hope route as the crisis enters a fourth day.
The 400-metre Panama-flagged Ever Given ship has been aground in the Suez since the morning of the 23 March after being blown off course by high winds in a sandstorm. This has meant that more than 200 vessels have been tailing back from the Suez Canal.
The blockage will have severe repercussions on global trade, as around 13% of the world’s trade comes to a halt. According to shipping data the 200,000-tonne ship, which is capable of carrying 20,000 containers - is holding up an estimated $13.3bn of goods each day.
The ship is blocking the path of other vessels travelling in both directions across the Suez including 41 bulk carriers and 24 crude tankers.
While it is unclear how long it will take to move the ship some experts have said the next few days while others have warned it could take weeks due to bad weather and high winds.
The Suez Canal, connects the Mediterranean Sea to the Red Sea. The slightest delay in traffic can result in congestion and disturb the delivery of goods and commodities on both sides.
Built in 1869, the capacity of the canal is around 50 vessels per day. Container ships accounted for 52.7% of the tonnage in 2019 transiting the canal including shipments from Asia to Europe and the US east coast as well as vice-versa.
Launched in 2018, the Ever Given, owned by Japanese firm Shoei Kisen Kaisha, is chartered by Taiwan-based Evergreen Marine. German firm Bernhard Schulte Shipmanagement (BSM) is responsible for its day-to-day operational running.
Brent oil futures rose 2.2% to $63.29 on Friday morning, while Crude oil (CL=F) was up 2.7% to $60.13 per barrel. Oil prices had previously fallen 6% earlier in the week before the blockage amid fears that the COVID-19 third wave could lead to oversupply in the market.
Shipping experts have pointed out that over and above the daily disruption, the longer the blockage goes on the longer it will take to clear.
Groundings are the most common cause of shipping incidents in the canal, with 25 in the past 10 years. There are likely to be major insurance claims against the Evergreen by the Suez Canal Authority and other ship owners.
The blockage underlines the importance of the new routes being developed to link Asia and Europe overland and via the Arctic.