Suez Canal Is Blocked by Container Ship Causing Huge Traffic Jam

Date: Wednesday, March 24th, 2021
Source: The Wall Street Journal

Egyptian authorities worked to dislodge a giant container ship that remained stuck in the Suez Canal, blocking all traffic on one of the world’s busiest shipping arteries.

Authorities hope to dislodge the ship within hours, according to an Egyptian official, as a flotilla of ships waited to resume voyages in both directions. Even if the ship is dislodged quickly, many idled vessels could still be delayed for days, threatening a new pressure point in a global supply chain already under intense strain.

The Ever Given, a 400-meter (1,312 foot) container ship, Tuesday became stuck in the canal sideways, with its bow wedged in one bank and its stern nearly touching the other, according to ship operators and images posted on social media. The ship, operated by Taiwan-based Evergreen Group, is one of the world’s biggest ocean vessels. It can move more than 20,000 containers and is taller than the Empire State Building if turned upright.

Ship trackers and brokers said there were more than 100 ships waiting to transit the canal, which connects the Red Sea with the Mediterranean. The traffic jam comes at a particularly bad time for global supply lines.

Car and computer makers are straining from a global chip shortage, exacerbated by a fire in a big chip-making factory in Japan last week. Car makers have closed plants after a Texas cold snap earlier last month hit plastics production, and California ports have been hit by backlogs and delays.

The Suez Canal is a vital trade route for tankers carrying oil and natural gas, along with container ships moving manufactured goods such as clothing, electronics and heavy machinery from Asia to Europe and the other way around. Around 19,000 vessels crossed the Suez in 2020, according to the Suez Canal Authority.

International crude prices were up more than 2% in early London trading, a move some analysts attributed to worry about oil shipments. Three tankers, including at least one chartered by Saudi Arabian Oil Co., carrying Saudi oil were waiting to move into the southern mouth of the canal early Wednesday. A total of 29 oil, products and liquefied natural gas tankers were waiting on the south side and 15 to the north, according to ship tracker FleetMon.

In Tokyo, shares of big shipping companies fell. Mitsui O.S.K. Lines Ltd. fell 4.6% and Nippon Yusen K.K. dropped 5.1%.

Ships have been grounded in the canal in the past, although incidents involving big vessels are rare. The waterway closed for three days in 2004 after a tanker got stuck. In 2016, another ship was briefly grounded, and a year later tugboats pulled out another container ship after a few hours.

Shipping operators occasionally divert ships from the canal to the Cape of Good Hope around Africa to avoid bottlenecks, but sailings can take two weeks longer and cost cargo owners more in freight costs.

The authority’s rescue units were working to dislodge the ship, Suez Canal Authority Chairman Lt. Gen. Osama Rabie told Egyptian media.

Public shipping data and news footage showed the Ever Given wedged with its bow on the eastern bank of the canal on Wednesday morning.

Suez Canal maritime services provider Leth Agencies said seven tugs have been dispatched so far, along with a dredger to dig out and refloat the vessel.

By early Wednesday afternoon local time, the grounded vessel had been partially refloated and was alongside the canal bank, with traffic expected to resume as soon as it was towed to another position, Gulf Agency Co., another service provider in the canal, said in a note to clients.

“There’s been some movement over the past two hours,” said Ionut Basiu, a Romanian radio operator aboard an Asian oil tanker stuck in the canal. “The chat on the radio is that the big container ship is being refloated and will be pushed alongside the bank so others can get through.” But Mr. Basiu cautioned it could take many hours until other ships could pass.

If the operation doesn’t work, then “the ship must get partly unloaded so it becomes lighter,” said Fotis Pagoulatos, an Athens-based naval architect, who has participated in past salvage operations. “This could take days.”

The Suez Canal Authority, which operates the canal, didn’t respond to calls and messages seeking comment on the situation. An Evergreen spokesperson said the ship was probably hit by strong winds causing it “to deviate from the channel and run aground.”

Leth Agencies said in a note to clients that some 42 vessels traveling northbound through the canal are idle along with 64 vessels sailing southbound.

The Ever Given is owned by Japan’s Shoei Kisen and operated on a long-term charter by Evergreen. It was sailing to Rotterdam from China, according to shipping data.

Parts of the 120-mile long Suez Canal are a single lane stretch waterway measuring up to 300 feet wide. Ships transit in northbound and southbound convoys. Any ship getting stuck can stop others from completing the transit.

The blocking of the canal is a significant challenge for Egypt’s government under President Abdel Fattah Al Sisi, a former military chief who came to power in a coup in 2013. The Egyptian state draws billions of dollars in revenue from the canal each year and regards the channel as a source of global prestige.

Egypt dug a new lane along one section of the canal in a massive $8 billion project completed in 2015. Mr. Sisi’s government hailed the expanded canal as a historic achievement and a symbol of national rebirth following the tumult of the 2011 Arab Spring revolution.

But the new lane only extends along one section of the canal, from the Mediterranean Sea in the north to the Great Bitter Lake, which is located between two segments of the canal.

The Ever Given blocked the southern section between the Great Bitter Lake and the Gulf of Suez, which only has one lane, therefore interrupting all traffic on the canal.

Egypt generated $5.61 billion in revenue last year, down from $5.8 billion in 2019 as international trade slowed during the coronavirus pandemic.

Gulf Agency Co., another service provider in the canal, said the Ever Given was sailing northbound as part of a convoy when it got stuck around 7 a.m. local time on Tuesday. More than a dozen ships behind her moved to anchorages waiting for the waterway to be cleared, Gulf Agency said in a notice to clients.

“There are ships ahead and behind us as far as you can see,” said Manolis Kritikos, a mechanic at a Greek operated tanker.

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