Date: Friday, March 26th, 2021
Source: Supply Chain Dive
- Multiple container ships are rerouting to the Cape of Good Hope to avoid the logjam created by the Ever Given blocking the Suez Canal, according to carriers and the ship tracking service Marine Traffic.
HMM Rotterdam, Ever Greet, Pan Americas and the Hyundai Prestige have all begun the journey toward the southern part of Africa, a spokesperson for Marine Traffic told Supply Chain Dive.
- A service alert from Hapag-Lloyd said HMM Dublin, HMM Stockholm, ONE Munchen, ONE Marvel and YM Wellhead have rerouted via Cape of Good Hope. An HMM spokesperson confirmed the diversion of Hyundai Prestige, HMM Rotterdam, HMM Dublin and HMM Stockholm.
As the blockage of the Suez Canal stretches into its third day, carriers are having to think hard about their options: Sit and wait for the canal to open for traffic, or reroute ships around the southern tip of Africa.
The Suez Canal is one of the most important trade arteries in the world, connecting Asia to Europe and the U.S. East Coast. In 2019, 18,800 ships crossed through the canal, according to the Suez Canal Authority.
As of Friday afternoon Central European Time, vessels with capacity totaling 727,764 TEU were affected by the blockage, according to data from project44.
"Another attempt to re-float the vessel earlier today, 26 March 2021, was not successful," BSM, the technical manager for Ever Given, said in a notice
"She may have been grounded on much more than the immediate banks of the canal," Chief Shipping Analyst at BIMCO Peter Sand said in an email Friday, referring to the Ever Given. "The more shallow water she is stuck on the longer it will take. Weeks is an option."
Sand said LNG carriers and bulkers carrying grains out of the U.S. have also rerouted around Africa on their way to Asia.
Carriers that have yet to divert any vessels said they are considering the possibility.
"Hapag-Lloyd constantly monitors the situation and closely follows the implications on its services," the carrier said in a service alert Friday. "We are presently looking into possible vessel diversions around Cape of Good Hope."
Making the decision to reroute vessels isn't easy for carriers, as the trip takes longer, resulting in extended transit times under normal circumstances for shippers and forwarders.
The trip from the Persian Gulf to Port of Rotterdam takes nearly 18 days via the Suez and more than 31 days via the Cape of Good Hope for a ship traveling at 15 knots, according to a 2019 paper in the Journal of Marine Engineering & Technology. But modern container ships commonly travel at faster speeds of up to 22.5 knots, according to another paper published last year.
While the trip is longer, it can actually be cheaper for carriers depending on the price of fuel because of the fees associated with traversing the Suez Canal. Last year, some carriers were already making the switch to the Cape of Good Hope to avoid the cost of crossing the canal, which can be $700,000 for a fully loaded 20,000 TEU ship, according to The Loadstar.
In the short term, experts have suggested that the blockage of the Suez could allow ports to work through their existing backlog. But when the canal opens, a large number of ships could show up within a short period of time, creating congestion issues at European ports, experts told Supply Chain Dive.
Some shippers that have not yet loaded their cargo are already looking at rail as a potential alternative, Florian Braun, Flexport's head of ocean for Europe, the Middle East and Africa, said earlier this week.
The logjam could also result in an uptick in blank sailings. Lars Jensen, CEO of SeaIntelligence Consulting, said in a LinkedIn post that the blockage means shippers should prepare for an "increase of de-facto blank sailings."
"I think it can be comparable to what happened last year when the COVID outbreak happened and carriers blanked a lot of sailings" because factories in Asia closed, Braun said Thursday. "And you can compare that now to 100% capacity reduction because the Suez Canal is blocked."