Giant cargo ship stuck in Egypt's Suez Canal could take 'weeks' to free
A giant cargo ship has been stuck in Egypt’s Suez Canal for the past three days. It’s blocking one of the world’s busiest trade routes. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
The behemoth cargo ship stuck in the Suez Canal and blocking traffic in one of the world’s most important maritime trade chokepoints isn’t set to break free just yet.
The Ever Given, a 220,000-ton mega ship nearly a quarter-mile long with a 20,000 container capacity, ran aground after being blown by strong winds while entering Egypt’s Suez Canal from the Red Sea. It’s completely blocked the passageway that is home to as much as 12% of the world’s seaborne trade and through which 50 container ships normally transit per day.
Tugboats and dredgers are currently working to dislodge the ship, which has been stuck since Tuesday evening. But the operation could take weeks, one of the executives involved has warned.
“While we believe and hope the situation will get resolved shortly, there are some risks of the ship breaking,” JPMorgan strategist Marko Kolanovic wrote in a note Thursday. “In this scenario, the canal would be blocked for an extended period of time, which could result in significant disruptions to global trade, skyrocketing shipping rates, further increase of energy commodities, and an uptick in global inflation.”
The crisis is another blow to the global supply chain after a brutal year ridden with delays, shortages and price squeezes on the back of the coronavirus pandemic.
What does this mean for global trade?
The shipping delays could impact everything from the clothes and shoes you ordered online to gym equipment, electronics, food, and energy supplies — meaning gas prices could get higher, too.
“Suez Canal container blockage to further rattle global supply chains, to drive pricing higher given pent-up demand,” analysts at JPMorgan said in a research note Thursday.
The man-made Suez, at 120 miles long, is a key transit point connecting East to West. And the 20,000 ships that pass through it yearly transport everything from oil and gas to machine parts and consumer goods.
While it’s still early to say what the full impact of the tanker crisis will be, the bank expects that in the near term, “the blockage is likely to add to industry supply strains, which are already hampered by ongoing supply chain bottlenecks″ in the form of port congestion and shortages of both vessels and containers due to Covid-19.
Ships are going to have to shift to entirely different routes, “will result in longer voyage times and causing further delays,” JPMorgan wrote.
And those delays could be more than 15 days for many ships, whose alternative is sailing around the Cape of Good Hope at the southern tip of Africa, which analysts say would increase shipping times by up to 30%.
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