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Container Ship blocking the Suez Canal

AMG Logistics

Image Courtesy: CNN

The salvage company said a massive container ship blocking the Suez Canal like a “beached whale” might take weeks to free, while officials halted all ships accessing the channel on Thursday in a new setback for global trade.

The 400-meter Ever Given, which is almost as tall as the Empire State Building, is blocking traffic in both directions on one of the world’s busiest shipping lanes for oil and refined fuels, grain, and other trade between Asia and Europe.

Dredgers were still busy late Thursday to clear thousands of tonnes of sand from the ship’s bow.

The blockade contributes to the global trade disruption triggered by COVID-19 over the last year, with elevated rates of ship cancellations, cargo shortages, and sluggish port processing speeds impacting trade volumes.

A.P. Moller Maersk, the world’s largest shipping line, said it was contemplating diverting ships across Africa’s Cape of Good Hope, which will add five or six days to the voyage between Asia and Europe. It stated that time-sensitive freight could be transported by train or aircraft, but no decisions had been taken yet.

The SCA said it had briefly halted all traffic on Thursday after allowing several boats to access the canal in the hopes of clearing the blockage. Maersk released a customer warning saying that seven of its vessels were impacted.

 

Image Courtesy: BBC

The ship’s bow and stern had been raised up to either side of the channel, according to Berdowski.

The Suez Canal Authority (SCA) had previously stated that nine tugs were trying to drive the vessel, which became stranded diagonally across the canal’s single-lane southern stretch on Tuesday morning due to high winds and a dust storm.

“Depending on the case, it might take weeks,” Peter Berdowski, CEO of Dutch corporation Boskalis, one of two rescue teams attempting to free the ship, told Dutch television program “Nieuwsuur.”

According to monitoring results, a total of 206 wide cargo ships, oil and gas tankers, and grain bulk carriers have backed up at either end of the canal, causing one of the worst shipping jams in years.

“It looks like a huge beached whale. It’s a huge burden on the beach. We might have to remove containers, barrels, gasoline, and water from the ship, and use tug boats, and sand dredging to reduce the weight.”

Dredging to clear 15,000-20,000 cubic meters of sand from around the bow continued after dark on Thursday, according to the SCA, in collaboration with a team from Boskalis subsidiary Smit Salvage.

The dredging work, which started on Wednesday evening and included two dredgers, aims to bring the ship back to a draft of 12-16 meters, which will enable it to be refloated, according to the authority.

Shoei Kisen, a Japanese shipowner, apologized for the incident and said that freeing the ship, which was bound for Europe from China, had been “highly challenging” and that it was unknown when the ship would be able to float again.

Another official familiar with the operation estimated that it will take days. “If you wind up in a situation where you have to clear freight, you’re looking at a lengthy process,” he said, refusing to be identified.

The rescue attempts may be aided by a higher tide expected on Sunday.

However, a predicted sea storm on Saturday and Sunday, with winds up to 80 kph (50 mph) and waves up to 6 meters high along the Red Sea and the Gulf of Suez, is causing a “disruption of maritime navigation,” according to the Egyptian meteorological authority.

The Suez Canal transports about 30% of the world’s shipping container volume on a regular basis, as well as around 12% of overall global trade in all commodities.

“Every port in Western Europe is going to feel this,” said Leon Willems, a spokesperson for Europe’s largest port, Rotterdam. “We trust that it will be sorted quickly for both businesses and consumers.”

AMG Logistics

Image Courtesy: Channel4 News

According to Wood Mackenzie, the greatest effect will be on container transport, but there will also be a total of 16 laden crude and product oil tankers expected to pass through the canal.

According to the study, the tankers are carrying 870,000 tonnes of crude and 670,000 tonnes of clean oil products including gasoline, naphtha, and diesel.

According to oil analytics company Vortexa, Russia and Saudi Arabia are the top two exporters of oil through the canal, while India and China are the top importers. The canal accounts for just 4.4 percent of global oil imports, according to consultancy Kpler, but a protracted interruption will complicate flows of Russian and Caspian oil to Asia, as well as oil from the Middle East into Europe.

Since most oil tankers are bound for Europe, where demand is currently weaker due to a new round of lockdowns, the effect on oil prices has been minimal so far.

Holger Loesch, deputy managing director of Germany’s BDI industry association, expressed concern, saying that previous shipping delays had already hindered output, especially in industries that rely on raw materials or construction supplies.

Around 16 percent of Germany’s chemical imports come by ship via the Suez canal, according to Henrik Meincke, chief economist for the VCI, a trade group of German chemicals and pharmaceuticals manufacturers.

Even if the ship is quickly refloated, the owner and insurers are looking at multimillion-dollar claims, according to industry reports. MS&AD Insurance Group is the group’s hull insurer, according to Shoei Kisen, while UK P&I Club is the liability insurer.

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