Sunday, March 28, 2021

UPDATED
Freighter blocking Suez Canal could have ‘critical impact’ on global trade: experts

IT ALREADY IS, $400M AN HOUR

Twinkle Ghosh and David Lao
GLOBAL NEWS 
3/27/2021

© (Credit Image: © Ahmed Gomaa/Xinhua via ZUMA Press) CAIRO, March 26, 2021 Rescue vessels work at the site of a container ship trapped on the Suez Canal of Egypt on March 26, 2021.

Friday's maritime traffic on the Suez Canal has now grown to over 200 backlogged ships — 30 of which are oil tankers — ever since the major shipping passage was first blocked by a container vessel that ran aground earlier this week.

According to data firm Refinitiv, another 100 ships are still en route towards the waterway. The blockage, which could take weeks to clear up, is now concerning industry experts — with one saying the incident could have a 'critical impact' on global trade.

"Already, we have seen an increase in price of oil," and that's kind of a "critical impact," Opher Baron, an economist at the University of Toronto, told Global News on Friday.

Read more: Satellite images show how one ship stuck in Suez Canal is causing so much disruption

Perishable commodity trades could also suffer setbacks.

Food that's travelling in containers also presents a "concern," Baron said, since those could possibly rot and incur business losses.

The "secondary impact," as Baron said, is the backlog of ships and containers.

Video: Biden says U.S. has capacity, equipment to help with vessel stuck in Suez Canal

With so many vessels suddenly stuck, they "can't be used to ship anything else," he said.



Suez Canal blockage could drive up gas price
s

The outfit most prone to suffer the impact of this jam are the manufacturers of toilet paper and similar house-bound products, like appliances, sofas, televisions and backyards.

"One of the issues with toilet paper" and other such consumer products is that they require stronger containers, according to Baron.

Read more: Massive ship stuck in Suez Canal continues to harm global shipping

"So, if these are stuck and cannot be offloaded, there can be a bottleneck in the supply chain," he noted.

The Ever Given first ran aground Tuesday about six kilometers north of its southern entrance. The ship measures nearly 400 metres and can carry more than 20,000 cargo containers.

The salvage company overseeing the rescue effort has warned it could take weeks to dislodge the beached Ever Given.

"Ships, containers and goods are all in the wrong places," Douglas Kent, an executive vice at the Association for Supply Chain Management (ASCM), told Reuters.

IKEA, one of the world's largest furniture sellers, and London-based electronics seller Dixons Carphone are among the retailers with goods on the stranded Ever Given, according to the news website.

Video: Massive cargo ship blocking Suez Canal continues to cause major disruptions

IKEA has nearly 110 containers on the ship wedged in the canal and is inspecting how many boxes of products are on other vessels waiting to enter the channel.

"Depending on how this work proceeds and how long it takes to finish the operation, it may create constraints on our supply chain," said Hannes Mård, spokesman for IKEA brand owner and franchiser Inter IKEA.

According to Lloyd's list, roughly US$9.6 billion in containerized goods — including exercise equipment, appliances, apparel and consumer electronics — pass through the Suez Canal each day.

Read more: Vessel blocking Suez Canal causes oil tanker shipping rates to nearly double

Analysts expect a larger upward impact on smaller tankers and oil products, like naphtha and fuel oil exports from Europe to Asia if the canal remains blocked for several weeks.

“Around 20 per cent of Asia’s naphtha is supplied by the Mediterranean and Black Sea via the Suez Canal,” said Sri Paravaikkarasu, director for Asia oil at FGE, noting that re-routing ships around the Cape of Good Hope could mean over 800 tonnes of fuel consumption for tankers.

The blockage could cost global trade US$6 billion to US$10 billion a week, a study by German insurer Allianz showed on Friday.

Video: Market and Business Report Mar 26 2021

Industry experts and shipping companies have since warned that the ship's grounding could potentially have implications for deliveries to Canadian ports in Montreal and Halifax.

"If it's a short shutdown, it wouldn't be that much different than a major weather event,'' Lane Farguson, a spokesman for the Port of Halifax, first told The Canadian Press on Wednesday.

According to Ferguson, Halifax's port is a major recipient of goods from Asia and the longer the delay is caused by the Ever Given, "the more things back up."

Read more: Hopes and memes rest on ‘tiny’ excavator digging out Suez Canal ship

Despite the majority of cargo from Asia travelling to Canada via the Pacific Ocean, a portion still comes through the Suez Canal according to Johanna Stroex, a spokesperson for container ship operator Hapag-Lloyd AG.

Stroex told The Canadian Press that goods en route to Canada via the canal were mainly retail and consumer goods.

Ferguson however said that it was too soon to tell if operations in Canada would be impacted by the canal’s shutdown, but that they would monitoring the situation there.

The St. Lawrence Seaway Management Corporation, which looks over the waterway between the Atlantic Ocean to the Great Lakes, also that they also expected minimal impact from the ship's grounding.

— With files from Global News' Eric Sorenson, Reuters, The Canadian Press and The Associated Press

No timeline given for extracting wedged ship from Suez Canal

SUEZ, Egypt — A giant container ship remained stuck sideways in Egypt’s Suez Canal for a fifth day Saturday, as authorities made new attempts to free the vessel and reopen a crucial waterway whose blockage is disrupting global shipping and trade.  
© Provided by The Canadian Press

Meanwhile, the head of the Suez Canal Authority said strong winds were “not the only cause” for the Ever Given running aground on Tuesday, appearing to push back against conflicting assessments offered by others. Lt. Gen. Osama Rabei told a news conference Saturday that an investigation was ongoing but did not rule out human or technical error.

The massive Ever Given, a Panama-flagged ship that carries cargo between Asia and Europe, got stuck in a single-lane stretch of the canal, about six kilometres (3.7 miles) north of the southern entrance, near the city of Suez.

Rabei said he could not predict when the ship might be dislodged. A Dutch salvage firm is attempting to refloat the vessel with tugboats and dredgers, taking advantage of high tides.

Rabei said he remained hopeful that dredging could free the ship without having to resort to removing its cargo, but added that “we are in a difficult situation, it’s a bad incident.”

Asked about when they expected to free the vessel and reopen the canal, he said: "I can’t say because I do not know.”

Shoei Kisen, the company that owns the vessel, said it was considering removing containers if other refloating efforts failed.

Two attempts to free the vessel failed Saturday, according to Bernhard Schulte Shipmanagement, the ship's management company, and a canal services provider, Leth agencies, despite hopes that a high tide might give the vesslela boost.

Bernhard Schulte had said earlier that “significant progress” was made late Friday at the ship’s stern where its rudder was released from sediment.

It said around a dozen tugboats were working Saturday alongside dredging operations that were removing sand and mud from around the left side of the vessel’s bow.

Some 9,000 tons of ballast water had been already removed from the vessel, the canal chairman said.

Since the blockage began, a maritime traffic jam had grown to more than 320 vessels waiting on both ends of the Suez Canal and in the Great Bitter Lake in the middle of the waterway.

Peter Berdowski, CEO of Boskalis, the salvage firm hired to extract the Ever Given said Friday said the company hoped to pull the container ship free within days using a combination of heavy tugboats, dredging and high tides.

He told the Dutch current affairs show Nieuwsuur on Friday night that the front of the ship is stuck in sandy clay, but the rear “has not been completely pushed into the clay and that is positive because you can use the rear end to pull it free.”

“The combination of the (tug) boats we will have there, more ground dredged away and the high tide, we hope that will be enough to get the ship free somewhere early next week,” he said.

If that doesn’t work, the company will remove hundreds of containers from the front of the ship to lighten it, effectively lifting the ship to make it easier to pull free, Berdowski said.

A crane was already on its way that can lift the containers off the ship, he said. Bernhard Schulte also confirmed that a Dutch and an Italian tugboat were scheduled to arrive in Egypt on Sunday.

Egypt Prime Minister Mustafa Madbouly called the ship's predicament "a very extraordinary incident,” in his first public comments on the blockage.

The Suez Canal Authority organized the first media trip Saturday to the site where the vessel was stuck. From a distance, a flotilla of tugboats and other salvage equipment appeared minuscule compared to the vessel, a reminder of the scale of effort needed to reopen the canal.

Bernhard Schulte Shipmanagement said Friday that its initial investigation showed the vessel ran aground due to strong winds and ruled out mechanical or engine failure. However, Rabei seemed to be pushing back against that assessment Saturday, saying that all possibilities, including human and technical errors, were being investigated.

A prolonged closure of the crucial waterway would cause delays in the global shipment chain. Some 19,000 vessels passed through the canal last year, according to official figures. About 10% of world trade flows through the canal. The closure could affect oil and gas shipments to Europe from the Middle East.

Some vessels began changing course and dozens of ships were still en route to the waterway, according to the data firm Refinitiv.

It remained unclear how long the blockage would last. Even after reopening the canal that links factories in Asia to consumers in Europe, the waiting containers are likely to arrive at busy ports, forcing them to face additional delays before offloading.

___

Associated Press writer Mike Corder at The Hague, Netherlands, contributed to this report.

Samy Magdy, The Associated Press


No comments:

Post a Comment