The Suez Canal, which was inaugurated in 1869, connected the port of Suez in the Red Sea with Port Said in the Mediterranean Sea, reducing east-west travel time by a week.
The Suez Canal separates Africa and Asia and is one of the busiest trade routes in the world, accounting for about 12% of the world's trade. Energy exports such as liquefied natural gas, crude oil, and refined oil account for 5% to 10% of the world's supply. The rest of the traffic is primarily consumer goods, from fire pits to clothing, auto parts manufacturing, furniture, and exercise equipment.
The Suez Canal Blockage of 2021
According to Egyptian authorities, a bulk carrier was pushed into the Suez Canal in Egypt on 23rd March 2021, temporarily blocking traffic in one lane of one of the world's major waterways. The Suez Canal Authority said that the carrier ran aground in the double-lane section of the canal, diverting other vessels of the convoy to other lanes. The canal crosses two convoys daily. One faces north towards the Mediterranean Sea, and the other faces south towards the Red Sea. The tugboat floated a ship to the south carrying 43,000 tons of cargo.
61 vessels carrying 3.2 million tonnes of cargo were passing through the Suez Canal. The cargo ship trapped in the Suez Canal cost about $400 million per hour to the global economy.
Effects of the Blockage
The blockade of the Suez Canal was a curveball caused by a combination of factors. The role of nature (a serious sandstorm) is clear, but the other factors that caused this great turmoil could only be determined after a thorough investigation.
- With 422 ships waiting in the blockage, it caused huge obstruction to the global maritime supply chain.
- Last year, the Suez Canal processed nearly 25,000 vessels, averaging 5,575 vessels per day. The turmoil of those seven days had a profound impact on the volume of world trade.
- Analysts estimate the damage to cost $9.6 billion per day. The accident hurt the global shipping trade by 0.2 to 0.4 per cent. In addition to the cargo vessels waiting at the mouth of the canal, the vessels in progress were also stopped.
- As the time required for marine inventories such as containers and ships increased desperately, the overall cycle time from loading to unloading increased in geometric proportions.
- Cellular vessel sizes are steadily increasing, including first-generation box vessels of 600 TEU capacity going up to the size of the Ever Given, with 20,000 plus TEU slots. This increase in capacity has resulted in lower unit prices for transportation, increased global maritime trade, and significant capacity expansion of port infrastructure, benefiting the entire world.
- However, continued improvements have also led to one-way developments that leave the world trade and shipping industry vulnerable to such incidents. The Suez case shows how badly the industry is prepared to respond to or provide alternatives to this crisis.
Incidents such as the Suez Canal blockage can be avoided through risk analysis and mitigation on complex networks such as sea routes, railroads, and roads worldwide. An accurate assessment of the impact of efficiency improvements on recovery time delays is required. This can be determined by assessing the efficiency lag scores of the various networks and reducing the scores as much as possible.
FAQs About Suez Canal
- What was the estimated loss due to the Suez Canal Blockage 2021?
According to transportation data, the blockage cost an estimated $400 million per hour.
- How do such blockages have an impact on inventory?
The ship delayed thousands of containers loaded with consumer goods and moored empty containers essential for China's exports. Chinese manufacturers serve orders for huge quantities of goods around the world. In addition, the pandemic blockade has boosted consumer demand over the past year. As a result, this continuous array of ships carrying a multitude of containers burdened the harbour and mitigated processing.
- What was the name of the ship that caused the Suez Canal Blockage 2021?
The ship that caused the blockage was called Ever Given.