Impacts of the Suez Canal Blockade (Part I)

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The blockade of the Suez Canal is wreaking havoc on global maritime trade, raising the prospect of further inflation, with more ships carrying cargo and commodities forced to divert from their route.

A special dredger has been deployed to free the ship that has been stuck in the key waterway for days. Natural gas prices have risen and food supply chains may be affected, should the blockade persist. Mark Ma, owner of China-based Seabay International Freight Forwarding Ltd. which has 20 to 30 containers waiting to cross the blocked channel, said that if traffic doesn’t resume within a week, “it will be horrible.”

Two additional tugs will arrive in the Suez Canal on Sunday, March 28, to assist in refloating the ship, said Bernhard Schulte Shipmanagement, the vessel’s technical manager. An attempt to refloat the ship today Friday was unsuccessful.

The ship pileup is creating another setback for global supply chains already strained by the pandemic-linked e-commerce boom. Approximately 12% of the world’s trade transits the canal, which because it is strategic, world powers have been jockeying for dominance. On Friday, the Biden administration expressed concern about the impact on global energy markets.

There are a number of key elements, described below:
– Two more tugboats will arrive at Ever Given on Sunday, the ship management company says in a statement.
– Tanker diversions. Several vessels in the Indian Ocean that were bound for Suez change course.
-The food supply chain faces major risks.
-The container ship could carry nearly $1 billion of cargo.
-Work to dislodge the ship will take at least until the middle of next week.
-Nearly 240 vessels have queued up, up from 186 on Wednesday.

Sea-Doo Maker becomes airplane

Sea-Doo maker BRP Inc. has parts from Asian suppliers stuck on vessels stuck in blockage. The situation prompted the Canadian RV maker to switch to its backup plan: shipping another batch of components from Asia to its North American plants.

“It’s more expensive, but it’s better than stopping the assembly lines,” BRP CEO Jose Boisjoli said Friday in a telephone interview.

Ever Given was refloated from stern

The elite salvage team working with the Suez Canal Authority was able to float the ship from its “stern/stern” and released the rudder at about 9 p.m. local time, according to Inchcape Shipping Services, a maritime services provider.

Another effort will be carried out using the high tide, in the hope of refloating the ship completely.

Canal authority says tugboat operations to resume

Tug pulling operations to free the ship resumed after dredging operations were completed, the Suez Canal Authority said on its Facebook page.

‘Perfect storm’ brewing for Italy’s ports

Once the Suez blockade ends, the huge backlog of ships will create a logjam in Mediterranean ports.

“When traffic flows again, ships will flood Italian ports,” said Daniele Rossi, head of the Italian ports association (Assoporti). Operational difficulties will make that difficult to “cope with,” he said.

“The perfect storm is coming”

About 40% of Italian imports and exports pass through the Suez Canal, according to Assoporti / SRM research on the Italian maritime economy.

Traffic jam approaches 300 ships

Some 293 ships ranging from livestock transporters to liquefied natural gas tankers are waiting to transit the clogged waterway, up from 238 on Thursday.

Source Bloomberg

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