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Last week a humongous trading ship got stuck in the middle of the Suez Canal, one of the busiest shipping lanes in the world. The Ship not only halted its own containers filled with millions of dollars’ worth of goods but halted the entire Canal which facilitates 12% of all foreign trade annually.
The ship is called the Ever Given and is as long as the empire state building is tall. Luckily as of the past few days, the Ship has been successfully moved out of the way by smaller boats and is no longer stuck. This comes as a relief to many companies, with the COVID pandemic already slowing global supply lines and cutting into profit, a ship preventing $400 million in trade per hour just adds insult to injury. Despite the freeing of the ship, the economic damage on supply chains will likely take months to fully recover. There are currently 367 vessels ( including 35 crude oil tankers and 96 container ships) waiting to use the canal.
The logistics teams of some of these companies must be having quite the week! In Fact, some of the biggest companies like IKEA have commented on the situation. IKEA told CNN last week that the blockage could “create constraints on our supply chain,” depending on how long it takes to free the Ever Given. Another company, Maersk, which is one of the largest shipping companies with many ships waiting in the Canal expresses similar sentiments, explaining “Even when the canal gets reopened, the ripple effects on global capacity and equipment are significant and the blockage has already triggered a series of further disruptions and backlogs in global shipping that could take weeks, possibly months, to unravel,”.
What do you think about the blockage? And do you think this could happen again?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
