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The grounding of a huge container ship on the Suez Canal – one of the world’s busiest trade routes for oil and consumer goods – will add to an already overheated container freight market and bump up rates for oil shipments if the vessel is not re-floated quickly, says industry sources.
“It’s like a perfect storm building up,” said an executive with a global ship management company, whose ship is just 7-8 vessels away in the logjam caused by the grounding.
“The container shipping rates have skyrocketed in recent months. If the re-floating of the ‘Ever Given’ lingers, it will be agonising for the trade,” he added. Any cargo coming from the West comes through the Suez Canal. The ‘Ever Given’ was travelling from China to Rotterdam when it was grounded early Tuesday on the Canal that stretches 193-km, which is a vital source of hard currency for Egypt.
Typically, some 60 ships pass through the Canal daily. The back log of ships waiting to transit the Canal will keep building up the longer it takes to re-float the container ship.
The only option then left for ships would be to transit via the Cape of Good Hope, a journey that takes at least 14 days extra between Asia and Europe, to reach the destination.
“This will add extra costs to oil and container shipments and also disrupt vessel schedules,” said the executive mentioned earlier.
Th salvage operations have been hit by the small size and limited number of tugs run by the Suez Canal Authority.
“For a 20,000 TEU capacity container ship, these tugs are insufficient. They are meant to guide the ships through the Canal and not for salvage work,” he said.
Backlog of ships
Clearing the backlog of ships waiting to transit the Canal even after the ‘Ever Given’ is re-floated will take many days, given the limited number of tugs in operation on the Canal.
“Purely from the container shipping perspective, this will definitely disrupt the schedules of India-Europe and India-US East Coast services,” said a container shipping industry executive. There are Indian crew on board the ship.
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