How the ship’s delay in the Suez Canal affected the world’s economy.

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On March 23, 2021, at 7 a.m, the container ship Ever Given ran aground on its nose, passing through the Suez Canal, while starting to turn around with its stern, completely blocking the channel. The vessel was partially removed from the shoal on March 29, 2021 at 04 a.m, having stood across the channel for more than 5 days. During this time, it managed to form a “traffic jam”, according to various sources, consisting of 300 ships. Let’s look at how this event affected the world economy and what such cases threaten in the future. 

The Suez Canal was opened in 1869 and connects the Mediterranean and the Red Sea. This is the largest artificial waterway in the world — its length about 163 kilometers, width — up to 250 meters, depth — up to 20. The canal allows water transport to pass in both directions between Europe and Asia without rounding Africa, reducing their path by 8,000 kilometers. Every day, more than 50 ships pass through it, and it holds 12% of all world trade.

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The ship Ever Given is 400 meters long. It’s one of the largest container ships in the world and it’s able to transport more than 20 thousand containers at the same time. The ship ran aground due to a sandstorm and strong winds, according to the captain’s speech. Once across the channel, the ship couldn’t move, and for the next few days, they tried to return it to service with the help of excavators. It was planned to partially unload the container ship using cargo helicopters to lighten the ship.

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At the entrance to the canal, tankers with oil, liquefied natural gas, container ships with various goods, and bulk carriers have accumulated. According to Vortexa, 10 tankers with 13 million barrels of oil are stuck on the approach. The long-term consequences of blocking the passage of ships in the Suez Canal in Egypt due to the stranded container ship Ever Given will be minimal, but in the short term, the price of oil may rise. This opinion was expressed by former member of the US Federal Energy Regulatory Commission (FERC) and managing Director of Branko Terzic & Associates LLC Branko Terzic. 

“The situation will have a limited impact in the short term, next week, but the Suez Canal is actually used to transport 8% of the world’s liquefied natural gas. The LNG that is transported through the channel is mainly Qatari and is destined for Europe. The long-term impact will be minimal, as it is expected that the Suez Canal will soon be unblocked, ” — RIA Novosti quoted Terzic as saying. 

Bloomberg notes that the blocking of the channel has led to a significant increase in prices for sea transportation. For example, the cost of shipping a 40-foot container from China to Europe has increased to $8,000 — almost four times higher than a year ago. The price increase also affected other sea routes. Now, the work of Suezmax vessels, carrying up to 1 million barrels of oil, costs about 17 thousand dollars a day. This is the highest figure since June 2020, as Bloomberg reported.

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The Japanese company Shoei Kisen, which owns the container ship Ever Green, has already apologized for the problems, caused by the fact that the ship was stuck in the Suez Canal. But how the company will compensate for the incident isn’t clear yet, because one day of blocking the channel cost the world economy about $10 billion.

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