The Suez Canal gridlock may cost up to $100 billion to the global trade and insurance if the vital trade route will not get back to normal this week, experts warned amid rising hopes that salvage efforts could free a mammoth container ship that has blocked the strategic waterway for seven days.
Each day of the blockade caused by the giant vessel Ever Given could be costing global trade some $6-10 billion even as it is holding up an estimated $9.6 billion worth of cargo each day between Asia and Europe, according to a study by German insurer Allianz. That translates to some 0.2 to 0.4 percentage points of annual trade growth each week.
Along similar lines, Lloyd’s List also estimated that blockage of the vital passageway for the global trade costs $400 million per hour in delayed goods. The London-based shipping-news journal, estimated the value of cargo goods passing through the canal every day at $9.7 billion on average, with $5.1 billion travelling west and $4.6 billion traveling east.
As extra boats head to help salvage efforts, experts are pinning hopes on dislodging the craft.
Suez Canal Authority chief Osama Rabie told reporters that the megaship, which has been wedged diagonally across the canal since Tuesday, blocking it in both directions, could be afloat soon, depending on how it responds to the high tides.
He said the ship, which is longer than four football fields and towers over nearby palm trees and fields, had moved from side to side for the first time late Saturday. “It is a good sign,” he said, adding that 14 tugboats were deployed around the stricken vessel and salvage crews were working round the clock.
Atik Munshi, managing partner at Enterprise House, said the Suez Canal is one of the jugular veins of the shipping logistics business.
“There is hardly any other economic alternative to the Suez Canal. It is believed that nearly 10 per cent of the global shipping passes through the Suez Canal. With the Evergreen vessel blocking the canal, the impact of logistics both in respect to costs and delay would be phenomenal. A cost of reroute to alternate the Suez Canal is expected to cost 3 times more per container and around 2-3 weeks additional time for delivery,” said Munshi.
“As scores of vessels use this canal on a daily basis, even a week of stoppage would result into hundreds of millions or possibly billions of dollar losses. The shipping management companies, ship owners and the insurance companies are facing a hard time to overcome this catastrophe. Though modern technology can perhaps resolve the blockage soon yet the harm is already done and even the clearance of the backlog would take a considerable time,” he said.
"The average number of vessels passing through the canal each day is 93, meaning that nearly 300 vessels have already been blocked thus far, with the jam not yet close to being cleared and the possibility that it could take weeks to dislodge the ship," the ship's owner, Japanese company Shoei Kisen, said.
“Even when the canal gets reopened, the ripple effects on global capacity and equipment are significant,” Maersk, the world’s largest container shipping company, said in an advisory statement on Monday. Maersk has three vessels stuck in the canal and another 29 waiting to enter, it said, adding that it had so far rerouted 15 vessels to sail south of Africa instead.
The crisis is likely to result in losses worth hundreds of millions of euros for the reinsurance industry, Fitch Ratings said.
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