Suez Canal blocked, maritime traffic slowed down … oil prices shaken

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[Article publié le 25.03.2021 à 9:13, mis à jour (détails et cours du pétrole) à 12:46]

Egypt tries Thursday to clear theEver Given, a giant 400-meter-long container ship that got in the way of the Suez Canal, blocking navigation on this key trade route between Europe and Asia the day before, an incident that could slow traffic worldwide shipping for several days or even weeks.

Thursday, theEgyptian Suez Canal Authority (SCA) announced that maritime traffic was “temporarily suspended” until the giant ship that blocks the waterway is refloated.

“Maritime authorities have indicated that 13 ships from the northern convoy [en provenance de la Méditerranée, Ndlr] via Port Said which had to pass (…) are stopped in waiting areas “, said George Safwat, spokesperson for SCA.

According to an evolving map from the Vesselfinder.com site (below), dozens of ships wait at both ends of the canal and in the waiting area in the middle of the canal.

vesselfinder, suez

[Cliquez sur l’illustration pour l’agrandir. Crédit: vesselfinder.com]

Significant delivery delays and rocky oil prices

The incident that took place overnight from Tuesday to Wednesday resulted in significant delays in the delivery of petroleum and other commercial products. The news sent oil prices surging to more than 5% on Wednesday.

But this Thursday, the courses have calmed down. Thus, WTI fell -1.49% to $ 59.98, while Brent fell a little less, -1.29% to $ 63.39.

Several tugs dispatched by the Suez Canal Authority (SCA) have been trying to free the giant from the seas since Wednesday morning. On Thursday, a maritime source added that authorities sent a dredge to the scene of the incident.

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For its part, the Japanese company Shoei Kisen Kaisha, owner of the container ship, announced Thursday that it was working with the authorities of the canal for the refloating, but that the operation was “extremely difficult”.

The blockage should slow down shipping for a few days, but the economic consequences should remain limited if the situation does not drag on, according to experts.

vesselfinder

[Le navire “Ever Given”, opéré par l’armateur taiwanais Evergreen*, a heurté la berge du Canal de Suez et s’est mis en travers bloquant tout passage, mais sans dommage pour l’équipage. L'”Ever Given” est un des plus grands porte-conteneurs au monde (200.000 tonnes, et capacité d’emport de 20 000 conteneurs). Crédit: vesselfinder.com. Cliquez sur l’image pour l’agrandir]

An in-depth impact on logistics chains

The consequences on prices will depend on the duration of the blockage according to Bjornar Tonhaugen, of the Rystad cabinet, who told AFP that “the effect will probably be weak and transient“.

On the other hand, “if the blockage lasts more than a few days, it could have a greater impact on prices and in a more lasting way”, he added.

“We have never seen anything like this before, but it is likely that the congestion (…) will take several days or weeks to subside, as it should have a ripple effect on other convoys, schedules and global markets, “said Ranjith Raja, head of Middle Eastern oil and maritime research at financial data aggregator Refinitiv.

But the current economic situation, against the backdrop of the health crisis and restrictions hampering the recovery, means that prices should not soar excessively in the immediate future.

Delicate clearance maneuvers to avoid damaging the structure

The Ever Given, a ship weighing over 220,000 tonnes, which was heading to Rotterdam from Asia, ran aground overnight from Tuesday to Wednesday, shortly after entering the canal, not far from the city of Suez .

The size of the ship, as long as four football fields, complicates operations de clearance according to Jean-Marie Miossec, professor at Paul-Valéry University in Montpellier (south-eastern France) and specialist in maritime transport.

“These ships have a significant draft, especially since they were fully loaded. Below the keel, the water level is weak”, he explains, assuring that the authorities must take the necessary time to “to maneuver well”.

“It’s not about weaken the structure of the ship during maneuvers and balance the forces to be distributed throughout the hull“, adds the expert by affirming that” the technical services of the authority of the channel are competent “for this operation.

ever given, suez

[Ce jeudi 25 mars 2021, image des travaux de dégagement pour tenter de libérer le porte-conteneurs “Ever Given”, échoué en travers du canal de Suez. Crédit: Reuters]

According to Bernhard Schulte Shipmanagement (BSM), the Singapore-based company responsible for the technical management of the vessel, the 25 crew members are safe and sound. And there was no pollution or damage to the cargo of the vessel with a capacity of over 20,000 boxes (TEU or TEU).

Strong winds and poor visibility would have caused the incident

Experts cite strong winds as one of the causes of the incident on the 60-meter-high ship. The SCA also mentions the reduced visibility due to a sand wind, which is common in Egypt at this time of the year.

Inaugurated in 1869, the canal has since undergone several phases of expansion and modernization in order to support changes in maritime trade. A link between Asia and Europe, it drastically reduces distances: 6,000 km less between Singapore and Rotterdam for example, or one to two weeks of travel time saved, compared to bypassing Africa.

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Evergreen Marine Corporation (EMC)

is a container shipping company established on September 1, 1968 by Yung-Fa Chang and headquartered in Taipei, Taiwan. The shipowner now covers 114 countries with some 160 giant container ships (Source: website of the shipowner). EMC is in the Top 10 of the world leaders of maritime transport by container.

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