The Echo-nomist

Credits to Billy Joel for the title. Seriously though, there’s trouble in the Suez Canal.

The Suez Canal is in Egypt, and links the Mediterranean Sea and the Red Sea. It’s a very narrow piece of land (as seen above) that extends 193km. This canal saves a lot of time and distance for the ships that sail between the Mediterranean Sea and the Indian Ocean. If not for this canal, the ships would have to go all around Africa via. the Cape of Good Hope, to reach Indian Ocean. This route would take them 2 weeks longer. Hence, it’s of great importance for ships sailing from UK, Europe, North American region to Indian Ocean.

How important is this canal?

Immensly important to say the least. If we’re talking numbers then, this canal accounts for as much as 13% of all maritime trade, including much of the world’s oil. According to the Suez Canal Authority nearly 19,000 vessels passed through the canal in 2020, carrying 1.2 billion tons of cargo!

What’s causing the trouble?

Ever Given.

That’s the name of one of the world’s largest container ships, and is owned by Evergreen Marine Corporation. It caused a traffic jam in the sea because it got stuck in the canal. The ship is 400 meters long and the canal is 200 meters wide. What more can I say?

What about the impact?

The stranded Ever Given ship is holding up about $6,666,666.67 per minute! More than 100 ships are waiting to cross the canal. It’s lead to ships lining up on both sides of the canal waiting to go. Some of the carrier’s stuck in the jam are carrying oil and fuel from the middle-east. Several carriers are looking to re-route cargoes via the Cape of Good Hope. But as I mentioned earlier, it will take longer. This will increase the freight rate which are already at an all-time high. It will also read to a rise in oil prices since many of the cargoes in the jam contain oil, fuel etc.

It will cause significant delays in shipments and lead to backlog in the ship schedules. Further, this will cause a setback to the canal’s recovery from COVID. It slumped during the pandemic, and is yet to recapture its shipping traffic.

How will they free the ship?

These illustrations from BBC, show how they plan on getting the ship to float. As long as the ship is grounded nothing much can be done. Especially since it weighs 200,000 tones. And that’s why the first step is dredging. They’re focusing on digging out the sand and silt from under the ship.

The next step would be to lighten the load. It will be easier to move the ship if it’s a tad bit lighter. Which is why they will probably unload some of the cargo from the ship and drain the fuel from the ship’s tank.

Tugging would likely be more useful after these two steps. Since a larger part of the ship would be in contact with water and it would be lighter.

It can take days, maybe even weeks to free the ship.

Fun Fact: The Ever Given crew consists of 25 members, all of whom are Indian😆

UPDATE (4th June 2021) :
It has been two months since the ship was freed on 29th March and to this day it remains stuck in the Suez Canal. Thankfully it’s not blocking the waterway anymore. It’s just anchored to a lake connected to the canal.
The Egyptian authorities took the ship in custody and after thorough investigation, they are demanding $550 million to cover the lost revenues caused by the ship blocking the canal.

Shoei Kisen Kaisha Ltd, the Japanese company that owns the ship, is in no mood to cough up the money. It has previously blamed the Egyptian authorities for allowing the ship to enter the canal during a massive sandstorm.

The Ken

And so it bitterly remains anchored to the Great Bitter Lake. Seems like Ever Given is a legend in the making…