The Evergreen container ship that was wedged in the Suez canal has now been refloated. However, its predicament highlights the fragility of global supply routes.
Overview – The Evergreen container ship
The Evergreen container ship hit the front pages of most media news outlets recently. In fact a few days ago, in a sandstorm and high winds, it became wedged across the Suez Canal. If people were not aware of this 120 mile stretch of waterway, they certainly are now. But more than that, they appreciate its importance as a vital artery for global trade.
The Suez Canal is a sea-level waterway that runs North to South, connecting the Red Sea to the Mediterranean Sea. It splits the African and Asian continents. In terms of shipping routes, it is the shortest maritime route between Europe and the East, towards the Indian Ocean and beyond. The canal was first opened back in 1869. At that time it was barely 8 metres deep, 22 metres wide at the bottom, 91 metres at the surface. Over time, there have been a number of upgrades. The latest one was in 2015 when 18 miles were added to its original length. The width is 205 metres in certain stretches. However, the canal is actually a single-lane channel in most parts with only two passing points.
This is only compounded by the amount of traffic and the size of the ships moving through the waterway. A Gold Class Container ship, like the Ever-Given, is approximately 400 metres in length. Pivoted on its bow would be nearly as tall as the Empire State building, 60 metres wide and a height of 32 metres. It can carry just over 20,000 containers in one load. In 2020, more than 50 ships on average passed through the 120 mile long waterway, accounting for approximately 12% of Global Trade.
With the acceleration in the growth of global supply chains over the past 30 years, particularly from Asia, it is perhaps surprising that the Evergreen Container ship is the first instance of a blockage in the Suez Canal.
Implications in the Short Term
The Pandemic had already caused Freight Rates to spike due there being a misalignment between containers/equipment to global demand and shipping. The Ever-Given was beached for 6 days, and even though this appears to be a relatively short period of time, the implications are likely to have reverberated across global supply routes already.
Lloyd’s List estimates that approximately $9 billion worth of goods ($400 million per hour!) passes through the Suez Canal daily. Even with certain carriers already reacting to reroute their vessels around the ‘Cape Route” – a journey around the point of Africa and back up to Europe – delays and congestion at ports are an inevitability. Some experts are pointing to at least 60 days before carriers and containers can become better balanced. Uniserve – a leading UK Logistics provider – have provided a useful list of all the vessels currently impacted (delayed or re-routed) by the incident on their website.
Clearly, there will be a knock-on effect and one should be working with Freight Forwarders to assess what this will mean at Ports (likely congestion for certain locations) and also freight rates, which have already started to rise again as the shock feeds through the market.
Global Supply Chains
On a broader level, the Evergreen Container Ship getting wedged in the Suez Canal has also highlighted an important fact. The movement of goods across oceans and lands is still subject to ‘significant shocks’. And this without mentioning the 1,400 containers a year on average lost at sea. Consumerism takes scant notice of what it takes to get goods around the world and to store but retailers/brands need to be thinking more strategically and ensuring there is resilience built into the supply chain.
One element of resilience is around the location. By diversifying the number of countries that you are sourcing from, you position better to embed agility into your supply-chain. As in this instance, there would be little stopping a European buyer from moving production to a near sourcing market, like Turkey, and shipping goods overland into their Distribution centre.
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Cover Photo Credits: DigitalGlobe, Inc. The title and logo have been added to the original image.