Friday’s maritime traffic on the Suez Canal has now grown to over 200 backlogged ships — 30 of which are oil tankers — ever since the major shipping passage was first blocked by a container vessel that ran aground earlier this week.
According to data firm Refinitiv, another 100 ships are still en route towards the waterway. The blockage, which could take weeks to clear up, is now concerning industry experts — with one saying the incident could have a ‘critical impact’ on global trade.
“Already, we have seen an increase in price of oil,” and that’s kind of a “critical impact,” Opher Baron, an economist at the University of Toronto, told Global News on Friday.
Perishable commodity trades could also suffer setbacks.
Food that’s travelling in containers also presents a “concern,” Baron said, since those could possibly rot and incur business losses.
The “secondary impact,” as Baron said, is the backlog of ships and containers.
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With so many vessels suddenly stuck, they “can’t be used to ship anything else,” he said.
The outfit most prone to suffer the impact of this jam are the manufacturers of toilet paper and similar house-bound products, like appliances, sofas, televisions and backyards.
“One of the issues with toilet paper” and other such consumer products is that they require stronger containers, according to Baron.
“So, if these are stuck and cannot be offloaded, there can be a bottleneck in the supply chain,” he noted.
The Ever Given first ran aground Tuesday about six kilometers north of its southern entrance. The ship measures nearly 400 metres and can carry more than 20,000 cargo containers.
The salvage company overseeing the rescue effort has warned it could take weeks to dislodge the beached Ever Given.
“Ships, containers and goods are all in the wrong places,” Douglas Kent, an executive vice at the Association for Supply Chain Management (ASCM), told Reuters.
IKEA, one of the world’s largest furniture sellers, and London-based electronics seller Dixons Carphone are among the retailers with goods on the stranded Ever Given, according to the news website.
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IKEA has nearly 110 containers on the ship wedged in the canal and is inspecting how many boxes of products are on other vessels waiting to enter the channel.
“Depending on how this work proceeds and how long it takes to finish the operation, it may create constraints on our supply chain,” said Hannes Mård, spokesman for IKEA brand owner and franchiser Inter IKEA.
According to Lloyd’s list, roughly US$9.6 billion in containerized goods — including exercise equipment, appliances, apparel and consumer electronics — pass through the Suez Canal each day.
Analysts expect a larger upward impact on smaller tankers and oil products, like naphtha and fuel oil exports from Europe to Asia if the canal remains blocked for several weeks.
“Around 20 per cent of Asia’s naphtha is supplied by the Mediterranean and Black Sea via the Suez Canal,” said Sri Paravaikkarasu, director for Asia oil at FGE, noting that re-routing ships around the Cape of Good Hope could mean over 800 tonnes of fuel consumption for tankers.
The blockage could cost global trade US$6 billion to US$10 billion a week, a study by German insurer Allianz showed on Friday.
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Industry experts and shipping companies have since warned that the ship’s grounding could potentially have implications for deliveries to Canadian ports in Montreal and Halifax.
“If it’s a short shutdown, it wouldn’t be that much different than a major weather event,” Lane Farguson, a spokesman for the Port of Halifax, first told The Canadian Press on Wednesday.
According to Ferguson, Halifax’s port is a major recipient of goods from Asia and the longer the delay is caused by the Ever Given, “the more things back up.”
Despite the majority of cargo from Asia travelling to Canada via the Pacific Ocean, a portion still comes through the Suez Canal according to Johanna Stroex, a spokesperson for container ship operator Hapag-Lloyd AG.
Stroex told The Canadian Press that goods en route to Canada via the canal were mainly retail and consumer goods.
Ferguson however said that it was too soon to tell if operations in Canada would be impacted by the canal’s shutdown, but that they would monitoring the situation there.
The St. Lawrence Seaway Management Corporation, which looks over the waterway between the Atlantic Ocean to the Great Lakes, also that they also expected minimal impact from the ship’s grounding.
— With files from Global News’ Eric Sorenson, Reuters, The Canadian Press and The Associated Press
© 2021 Global News, a division of Corus Entertainment Inc.