It is an accident in the worst possible place in the world: A gigantic container ship is blocking the Suez Canal. The possible consequences for world trade are devastating.
A crashed container ship continues to block the Suez Canal. Ten tugs tried in vain to free the 400 meter long ship from its bank position in one of the most important waterways in the world.
The 224,000 ton and 59 meter wide freighter named “Ever Given” is one of the largest container ships in the world. According to the port authority, he was unable to maneuver in a sandstorm in strong winds, lost course and ran aground near the port city of Suez. The place where the container ship wrecked is extremely bad for world trade.
The Suez Canal, which connects the Mediterranean with the Red Sea and the Indian Ocean, is one of the most important routes for the global economy. Around 12 percent of the global freight volume and around 30 percent of the container volume flow through the canal, which was opened in 1869.
The problem: Not many routes lead around the Suez Canal in shipping. It shortens the sea route from Europe to India by around 7,000 kilometers. That is important in tightly timed world trade. The alternative route around the southern tip of Africa takes a week longer.
According to the canal authority, almost 19,000 ships passed the waterway last year, making an average of almost 52 ships a day. Ships are already piling up in both directions.
“Like the complete closure of a large motorway”
The Association of German Shipowners warned of the effects of a longer blockade. “It’s like the complete closure of a large German motorway. The longer it takes, the more clearly the effects will be seen,” said association spokesman Christian Denso. The exact consequences are still uncertain.
The biggest challenge for shipowners and the economy is that nobody knows how long the “Ever Given” will block the channel. So no one can estimate whether the detour around the Cape of Good Hope is worthwhile, said Denso. “It’s like if you are stuck in a traffic jam on your way to vacation and have to decide, I’ll take the diversion or I’ll wait in a traffic jam until it’s over.”
Association spokesman Denso said that with container ships it is usually not important that they arrive quickly, but that they arrive on time. It is about the shipowner’s promise that, for example, the car door will arrive in Bremerhaven on time.
Tankers are also affected by the blockade. “Everything that loads oil down there and travels to Europe and North America travels through the Suez Canal,” which, unlike the Panama or Kiel Canal, has no width, height or length restrictions. “Everything fits through there.” The longer the traffic jam, “the quieter it will be in the Port of Hamburg,” said Denso. After that, however, the ships would come in bulk for handling.
There could be “tightening”
The machine and plant manufacturers are also looking at the accident in the canal with concern. “The Asian markets are currently the growth drivers for mechanical and plant engineering,” said the chief economist of the industry association VDMA, Ralph Wiechers.
“In terms of exports, the congestion in the Suez Canal may mean delays in delivering machines, machine parts and components to Asian customers.” Even without this disruption, the industry is already feeling bottlenecks in supplies from Asia – especially in electronic components and semiconductors.
“Depending on the chosen transport route, there could also be tightening here,” said Wiechers. “Since sea freight is en route for a long time, the current situation on the Suez Canal will probably only become noticeable in a few days.”
Oil prices rose sharply
The traffic jam also has an impact on oil prices, which at times rose by around six percent – investors fear about the oil supply. With a shortage of supply and the same or increasing demand, the price also rises.
On Thursday, however, oil prices came under noticeable selling pressure again. A barrel (159 liters) of Brent North Sea oil cost $ 63.15 that morning. That was $ 1.26 less than the previous day. The price of a barrel of West Texas Intermediate (WTI) branded American crude fell $ 1.25 to $ 59.93.
Ship owners face high costs
In addition to its importance for world trade, the Suez Canal is also an important source of income for the Egyptian state. A cargo ship costs the equivalent of around 250,000 euros to pass through – last year that poured around 4.2 billion US dollars into the state coffers of Egypt.
According to experts, the Japanese owner of the wrecked ship Shoei Kisen and the insurers are likely to face claims in the millions. “Everything falls back on the ship,” said David Smith, marine manager at insurance broker McGill and Partners.
According to two insiders, the “Ever Given” is insured with Japanese companies. In industry circles, there was talk of $ 100 to 140 million in insurance sums just for damage to the hull and the machines. In addition, the owners of the stowed ships are likely to demand compensation. A statement from Shoei Kisen has not yet been received.