Page 16 - Issue-30-En

ELITE Vol.1, Issue 30, April 2021 Happy

Ramadan

The Suez Canal crisis: How one ship

blocked $10 billion worth of trade

YASMIN TAREK, 4TH LEVEL , ECONOMIC

Disruption of global trade and its impact on the economy
The blockage caused significant delays in oil and other
On Tuesday, March 23, after being caught in 40-knot commodity deliveries. Making some businesses consider
winds and a sandstorm that caused low visibility and poor rerouting ships across the southern tip of Africa, which
navigation, The Ever Given wedged diagonally across and would add about two weeks to the journey and raise the
blocked The Suez Canal. The Ever Given (a container piracy problem.
ship that sails under the Panamanian flag with 25 Indian The economic fallout started almost immediately after the
crew members on board) is owned by Japanese shipping Ever Given ran aground, with crude oil prices fluctuating
company Shoei Kisen KK and operated by Evergreen wildly. As the Canal is a crucial conduit for oil shipments
Marine (a Taiwanese company) is almost as long as the from the Persian Gulf to Europe and North America. Before
Empire State Building, it measures 400 meters long and the pandemic, the canal handled about 5% of globally traded
59 meters wide and weighs 219000 ton. crude oil and 10% of refined petroleum products. Following
The Suez Canal was blocked for around 6 days because the blockage in the canal, the price of oil, the international
the Panamanian container ship (Ever Given), which was standard, jumped 5% to $62.52 a barrel on Wednesday,
March 24. Yet, a short-term outage was unlikely to have a
sailing from China to the Netherlands port of Rotterdam, long-term effect, since oil demand remained low during the
caused Trade disruption around the world and one of the pandemic. The countries that send the most oil through the
worst shipping jams in years. The blockage resulted in a canal, Russia and Saudi Arabia, are likely to be specifically
massive traffic jam, over 300 ships along the 193- affected. Also, the impact will reach India and China, which
kilometer canal were stopped. are the two largest oil importers through the canal.
Stressing the importance of the Suez Canal that is In addition to gasoline, the canal transports consumer
considered one of the world’s most vital shipping lanes. products such as clothes, furniture, and auto parts. According
As Suez Canal handles about 12% of all global trade, in to Bloomberg, around $10 billion worth of goods is currently
2020 according to the Suez Canal Authority (SCA)19,000 trapped in the Canal, with global trade losses of about $400
ships passed through the canal, and more than 50 ships a million per hour. "Every port in Western Europe will be
day. Additionally, container ships make up about 26% of affected," a spokesman for the EU's largest port, Rotterdam,
the canal's total traffic, which is dominated by oil tankers. said. The blockage would almost certainly be costly to
As compared to the path around Africa's southern tip, the Germany's economy. Egypt, on the other hand, lost between
passage saves ships about 7,000 kilometers of travel time. 18 and 20 million US dollars per day.
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