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Trade via cargo containers comes under impact of Suez Canal logjam

P Manoj Mumbai | Updated on March 25, 2021

India’s exporters and importers shipping cargo in steel containers are keeping their fingers crossed as attempts get underway to re-float the containership that ran aground in the Suez Canal early morning on Tuesday causing a maritime traffic jam.

The 193-km-long canal is one of the world’s busiest trade routes for oil and consumer goods shipments between Europe and Asia.

Delay in shipments

The shipments, either for export or import, which are in the pipeline, may be delayed by a couple of days, says the Federation of Indian Export Organisations or FIEO.

“We are hopeful that the backlog gets cleared in 7-10 days,” said FIEO Director General and CEO, Ajay Sahai.

The queue of ships waiting to transit the canal is growing, with some industry estimates suggesting that about 200 ships are waitingto be cleared before proceeding on their onward journey to destinations.

“While efforts to dislodge the vessel from the Suez Canal continue, close to two hundred ships are caught up in the traffic snarl in both directions of this global trade artery, which carries about 12 per cent of global trade. So far, nine Maersk container vessels and two partner vessels are anchored in the area waiting for the passage to re-open,” said Maersk Line, the world’s biggest container carrier.

While ETAs (of ships) are jeopardised as salvage efforts continue, the impact on the global supply chain as a result of the vessel blockage in the Suez Canal depends on how long the route remains impassable, it added.

Efforts are being made to move all north-bound vessels out of the canal to facilitate a clear passage and continuous convoys when the ‘Ever Given’ vessel is successfully re-floated.

The Suez Canal Authority plans to send 13 smaller vessels to Great Bitter Lake (Ismailia) to minimise number of vessels waiting at Port Said/Suez for anchorage.

Operational challenges

The blockage is adding further operational challenges to the container shipping industry that is already under an acute shortage of boxes, lack of space on ships, and soaring freight rates as the global trade picks up steam from the ashes of the pandemic.

From an Asia-Europe perspective alone, the canal sees approximately 30 head haul passages per week, with a capacity of around 380,000 twenty-foot equivalent units or TEUs.

“There is going to be cascading effect on the voyages of all other vessels that is en-route. Delays are expected for ships sailing to and fro through the Suez Canal,” said Purnendu Shekhar, Founder, Cogoport.

There has been a major impact of the lack of inventory, blank sailings and sky-rocketing freight rates due to the Covid 19 pandemic. Further to this, blank sailings from Asia are expected irrespective of the demand, he said.

“Unfortunately, this incident comes at a time when the world markets are trying to bounce back after the pandemic. Although the ramifications of the ‘Ever Given’ incident may be short term to say the least, the world can ill-afford even such incidents at the given time,” Shekhar added.

Published on March 25, 2021

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