When the Suez Canal stops, so does the economy
The Ever Given, a 200,000-ton ship carrying 20,000 containers, is stuck in the Suez Canal after high winds blew it off course on Tuesday.
The fallout has been immense, and continues to cascade the longer the ship remains stranded. Hundreds of tankers are now blocked. The queue is growing. The anticipated impact on markets resulted in a three per cent rise in the price of Brent crude.
There are few subtleties when it comes to the Suez Canal, arguably the world's most important waterway, handling roughly 12 per cent of all shipping trade. More than 6,000 vessels used the canal in 2020, making it one of the most reliable maritime trade routes. As a result, when things do go wrong, the results are felt all over the globe.
Every day that the waterway is blocked, over $9.5bn worth of shipping traffic comes to a halt
In 2019, the canal celebrated its 150th anniversary. Since its opening, it has been the focal point of commerce, great power rivalry, liberation movements, even war. It was conceived in the 19th century by French diplomat Ferdinand de Lesseps and Egypt's then ruling family, who envisioned a trade passage that would allow vessels to bypass a long East-West route around the tip of southern Africa. After a gradual British commercial takeover of the waterway, the leader of Egypt's 20th century independence movement, Gamal Abdel Nasser, seized it in 1956. It has since become one of the greatest symbols of the nation's post-colonial independence.
Despite its historical and contemporary significance, we hear relatively little about it nowadays. Before the Ever Given's blockage, the main development for the canal during the past several years was Egyptian President Abdel Fattah El Sisi's decision to expand the waterway, at a cost of more than $8bn. The plight of the Ever Given suggests that that investment, viewed by many at the time as an extravagance, was prescient. The canal certainly requires more future-proofing, not less.
The National Editorial
Shipping has had a difficult year. Covid-19 has caused widespread delays for a sector that is beholden to strict timetables. This has caused a disproportionate number of bankruptcies, often at the expense of crews onboard, some of whom are left stranded at sea for extended periods of time. With huge knock-on effects for the global economy compounding by the day, it is very obvious that a solution must come quickly.
Finding one is less obvious. Egyptian authorities have said it could take as long as a number of days to free the vessel. There is hope that higher tides over the coming week could end the crisis, and there are more draconian options available, such as removing containers to lighten the ship. But the more drastic the measure, the more time it will take.
The Ever Given's owners have said they are extremely sorry for the incident. Every day that the waterway is blocked, more than $9.5bn worth of shipping traffic comes to a halt. A solution cannot come soon enough.
Updated: March 28, 2021 10:45 AM