Suez Canal: Prolonged closure of crucial waterway costs approximately $400 million an hour

Massive  400-meter (1,300-foot) container ship lodged lengthways in the strategic route of Suez Canal, one of the key shipping lanes from where 12 percent of the world’s goods cargo and oil tankers’ transit, has left the global trade in turmoil. It is costing $400 million an hour in goods for the world's trade, according to Lloyd’s List's calculations. Moreover, Refinitiv shipping data found that hundreds of goods vessels waiting to pass through the crucial maritime passageway for Asia and Europe have now been docked at the anchorages as rescue missions for the 224,000-ton Ever Given vessel, so tall as an Empire State building, is underway. 

Late Thursday, the Suez canal authority deployed a dredger that was seen removing sand and mud from the side of the ship bow, however, it may take days before the vessel might be able to sail again. "In addition to the dredgers already on site, a specialized suction dredger is now with the vessel and will shortly begin work. This dredger can shift 2,000 cubic meters of material every hour,"  Bernhard Schulte Shipmanagement (BSM) the Taiwan-operated vessel's technical manager said in a statement. 

The gigantic vessel has stalled maritime traffic both ways for over 3 days, blocking transit for 165 vessels, of which there are 24 crude oil tankers, 16 LNG and LPG carriers, and 15 goods cargo, incurring a $16 million loss for global trade per day. The vessel itself has sustained hull and machinery damage worth up to $100-140 million, causing huge losses and flaring oil barrel prices. The vessel bound for the Netherlands has stopped nearly $10 billion worth of goods while there’s no alternative shipping lane to reroute those goods carrying ships. 

The global supply has already started to suffer a hit as a Brazilian company that exports a third of global supplies of hardwood pulp told Bloomberg that Suez Canal blockade has caused supply snags and there might be a risk of shortage of goods such as toilet paper. Producers robusta coffee, used in Nescafe, have reported a similar disruption as vessels are stationed at ballast. Coffee beans are reportedly exported from East Africa to Europe and Asia through the Suez Canal, whose chokepoint is now completely non-commutable. 

13 million barrels of oil halted

According to Weforum, the incident has already halted the passage of 13 million barrels of oil as approximately 1.25 billion tonnes of cargo, about 19,000 ships are impacted from the closing of the world’s one of most important waterways creating vulnerabilities in the global trading systems. There are also fears of backlogs and collisions as the 93km of canal witnesses speeding convoys on tightly scheduled slots sailing with essential commodities that are time-sensitive.

Consumer goods to and from Persian Gulf and India to Europe, naphtha from Europe to Asia and crude from the Persian Gulf to US Gulf, and crude oil for the United States from Saudi Arabia, equivalent to an Aframax cargo is in line of major impacts for as long as the  Panama-flagged mammoth Ever Given vessel is lodged on the maritime passageway. Crude oil from North Sea fields exported to Asia will be held back. Some vessels have already begun to transit through the African Cape with global trade risks looming large.