The Suez Canal
The Suez Canal
The MV Ever Given is owned by Japanese Shoei Kisen Kaisha Ltd but operated by Taiwanese logistics and transport conglomerate Evergreen by its maritime subsidiary, Evergreen Marine Corp, and registered in Panama.
At 220 tons and over 1300 feet in length, it is one of the World's largest container ships capable of carrying 20,000 [piled high] containers.
Imagine something the size of the Empire State Building having fallen over and blocking the Suez Canal, which connects the Indian Ocean via the Red Sea to the Mediterranean Sea and facilitates the transfer of goods on board that equates to between 10 and 12% of World trade.
On Tuesday, March the 23rd, a weather incident of high winds and sandstorms combined with pilot error forced the unfortunate ULCS [Ultra large container ship] into a diagonal grounding and blocking of the Canal, which on further analysis is going to require a considerable amount of tugboat and land-based assistance to fully correct.
Any delay of this sort to the 11-hour journey to cover the 120-mile canal journey can cost up to $4000 an hour per ship.
Some insurers will be pretty vexed. It is estimated that after only three days, more than 150 ships carrying a cargo value totaling something of the order $30 billion are now delayed and backed up at either end. The alternative route from Europe around the Horn of Africa takes an additional ten days to complete the extra 4900-mile detour.
Talk about the world's most expensive traffic jam as ships accumulate at 50 a day, as the costs and penalties rise by the hour.
Equally, the cash-strapped Egyptian Government relies on annual $6 billion transit revenues from those that use the Canal, and they will inevitably be seeking compensation.
Looking at how unexpected events unfold following the sudden blockage of a critical artery to world trade only highlights how geopolitical shock can have seismic and long-lasting effects.
As containerization and the ships that transport them continue to grow, they remain a prime building block to China's Belt & Road initiatives, not forgetting its complimentary Maritime Silk Road. Indeed, the Ever Given was en route from China to Rotterdam.
The Suez Canal is a vital economic conduit as it handles a vast volume of Asia's merchandise exports to Europe and the USA.
The Suez Canal is no stranger to controversy or political tumult.
The forced nationalization by President Nasser of Egypt in 1956 when the canal was closed for six months caused massive disruption to European oil supplies, much to the chagrin of the French and British Governments who had initially built the Canal that opened in 1869. This Egyptian action was the catalyst for the advent of more versatile and mega cargo ships we witness today.
The 6-day Arab-Israeli conflict closed the canal from 1967 till 1975. Again, this action heralded the Super Oil tankers' arrival, much too large to use the channel and the construction of international pipelines obviating the need to use the canal.
However long the disruption, the consequences of spikes in oil prices and shipping rates, we believe in 6 months this temporary dislocation will be a long-forgotten drama.