The Suez Canal Authority officially announced on the 25th March 2021 that navigation through the Suez Canal is temporarily suspended.
Announcing the suspension, Admiral Osama Rabie, Chairman and Managing Director of the Suez Canal Authority (SCA) said that this is only until the floatation works of EVER GIVEN a 20,000 TEU container ship that has been stuck across the single-lane on the southern canal since 23rd March 2021, is completed.
As per an SCA statement, “His Excellency has declared that yesterday witnessed the transit of 13 vessels from Port Said, among the Northern convoy, that were expected to continue their transit through the Canal according to projections on the time of completion of the floatation works of the grounding vessel.
However, an alternative scenario had to be adopted; which entailed those vessels dropping anchor in the Bitter Lakes waiting area, until navigation can be fully resumed after the floatation of the vessels.”
The floatation efforts included towing and pushing the grounding vessel using 8 large tugboats; largest of which is BARAKA 1 with a towing power of 160 tons.
It is estimated that around $8-10 billion of trade transits the Suez Canal on a daily basis, which is about 12% of global trade, including trade that is crucial for the European and Asian supply chains.
Experts seem to be united in their responses echoing the implications this blockage will have on global trade and more importantly on the already volatile freight rates.
The biggest is of course the cost implications of this blockage with costs of around $400/million per hour being bandied about.
As you can see from the images below and above, you can see a line of ships waiting for passage with an estimated 237+ ships including oil tankers and dozens of container ships, building up in the queue at both ends of the Canal waiting to get to the other side.
Reading up on what Lars Jensen of Sea Intelligence Consulting has to say in this matter, one can see how easily costs can reach to this level firstly with the high ship charter rates and secondly with the fuel costs.
The alternative route to the Suez Canal for a ship from Asia to Europe is to go around Africa. As per Lars, going round Africa from Asia to Europe will, in very very round numbers, use an additional 700 tons of fuel each way.
There are 27 weekly services in each direction per week, which equates to 38,000 tons of fuel per week which is around $19 million per week.
Some ships like the HMM Rotterdam has already moved away from the queues on the Suez Canal and is making its way around Africa on its journey from UK to Singapore.
It is understood that Salvage teams from Japan (Nippon Salvage) and Rotterdam (Smit Salvage) has been assigned to try and re-float the vessel after the SCA tried for over 2 days to free the ship with all available equipment including the 8 tugs mentioned above.
While shipowner Shoei Kisen Kaisha and the ship’s insurers and/or P&I club (said to be UK P&I Club) is reported to be already facing millions of dollars in claims not just for the costs of salvage operations, but also for the global shipment delays caused by the blockade along with possible claims from the Suez Canal Authority for loss of revenue from at least 30 ships which were unable to transit the canal.
Opinions however will be divided on who will end up paying for all the indirect costs of this blockage to global trade.
The latest live map from Marine Traffic shows the line up including the position of Ever Given.
Meanwhile, there has been no news on the cargo on board the Ever Given itself as to the insurance implications including possible General Average etc which will be only known once the ship itself is released.
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