Lessons from the Suez Canal blockage

S Anantharaman | Updated on April 09, 2021

(File photo) Ship Ever Given, one of the world's largest container ships, is seen after it was fully floated in Suez Canal   -  REUTERS

A thorough risk analysis and mitigation in complex networks is of utmost importance to avoid such mishaps

The Suez Canal blockage was a curve ball that was thrown by a combination of factors. While the role of nature — a severe sandstorm — is evident, the other factors that contributed to this major disruption will be known only after a thorough investigation.

On March 23, a container ship Ever Given belonging to the Taiwanese shipping line Evergreen ran aground on the eastern bank blocking the canal.

The Suez Canal, opened in 1869, connects Port Suez on the Red Sea to Port Said on the Mediterranean Sea cutting short the voyage time from the east to the west by a week.

A cursory analysis throws up possible decreased engine power exacerbated by high velocity winds which used the resistance offered by the wall of containers (surface of roughly 14,000 sq m) virtually converting it into an effective sail, as probable causes for driving the ship aground.

Was this a freak occurrence? Or, a stochastic event that can only be analysed and not predicted?

Regardless, it ended up causing a massive disruption to the global maritime supply chains, with 422 ships waiting due to this blockade. The Suez Canal last year handled almost 25,000 vessels averaging 55-75 vessels a day and this seven-day interruption hugely impacted the throughput of world trade.

Estimates by analysts, including Lloyds, put the cost at $9.6 billion for each day. Allianz, the insurer of the ship, pegged the cost to global trade between $6 billion and $10 billion. The accident is expected to affect negatively the global maritime trade by 0.2 to 0.4 per cent.

The throughput factor

In transportation register, throughput is the quantum of traffic in units that can be put through two discrete points in a 24-hour cycle. The units of measurement can be tonnes or ships or trains or vehicles.

In the past throughput was modest and, therefore, the cost of any disruption was minimal and so was the number of days required to overcome the lag of disruption. But the massive increase in throughput has resulted in hugely ballooning the cost of disruptions. Most notable is the increase in vessel size which has drastically reduced the cushion or tolerance factor in the other dimensions of maritime traffic such as canals, waterways and ports.

During the Suez Canal blockage, other than the laden vessels which were waiting at the mouth of the canal, ships that had been en route and in loading were also held up. With turnaround times of maritime inventory such as containers and ships being hopelessly elongated, the entire cycle time of loading to unloading rose in geometric proportion. These cascading costs are finally passed on to the end customer.

But is it fair to penalise the customer in such an event where stack up tolerances present a clear and present risk?

Many may argue that the Suez Canal blockage was a Black Swan event that could not be foreseen and hence losses arising out of it should be borne equitably. But is that really so?

Ship sizes of cellular vessels have steadily increased starting with first generation box vessels of 600 TEU capacity going up to the Ever Given size, with 20,000-plus TEU slots.

This increased capacity has reduced the unit cost of transportation and led to major capacity addition to infrastructure in ports apart from increasing global maritime trade, benefiting the world at large. Still bottlenecks remain.

But the continuous improvement to throughput has also led to lopsided development making world trade and the shipping industry vulnerable to a ‘Suez blockage’ like incident.

The Suez incident shows how woefully unprepared the industry is in its response or alternatives to this crisis.

In the initial hours of the untoward incident the extent of damage was unknown. Plans had to made on an ad hoc basis. The strategy itself was based only on confronting the crisis with tug boats. Finally, Ever Given was literally lifted out by high tides.

Authorities must constantly keep an eye on service recovery after such cataclysms and it is naive to assume that it will be business as usual.

Here are some measures to tackle such a crisis:

First, crisis forecasting, where every foreseeable risk should be itemised and the extent and depth delineated in terms of hours of disruption, human and commercial losses. In the Suez blockage case, it would not only include the breadth and depth and weather of the canal but also the characteristics of the ships that pass through it. This should be followed up by a probability analysis of such risks. A Swiss cheese model analysis is a must. Did the Suez Canal Authority exhaustively list the risks? The Heinrich Triangle, which says that any major catastrophe is preceded by a number of minor ones, should also be used to red flag such events.

Second, measures to prevent such risks can be put in place after a deep study. In the Suez case, it would have been an assessment of engine power in relation to weather systems forecast before a ship is permitted entry. Today, everything is predicated on self-declaration by the ship master. Having a system that would regulate traffic in high winds, which can cause disastrous ship collisions, as movement in the canal is in single way convoys, can be thought of.

Third and most important is building of redundancies to minimise the effects of disruptions. In this, the lessons from the domain of electronic communication in the nature of resilient topologies can be useful. In the Suez case, the alternative that was available to shippers was to traverse another 8,000 km which was no really alternative.

It is also an interesting point whether the clause of force majeure can be applied here, which apply to cases of claims occasioned by this mishap. The Suez failure is clearly a case of casual planning, development and operation which can be avoided by risk analysis and mitigation in complex networks like ocean ways, railways and roadways the world over. The need to accurately assess the impact of efficiency improvements on the lag of recovery duration is an urgent need. This can be established by assessing the Efficiency Lag Score of various networks and planning to reduce the score as much as feasible.

The writer was former Principal Chief Operations Manager, Southern Railways

Published on April 09, 2021

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