Domino effects of Suez Canal blockage could last for months

As a grounded containership blocks cargo traffic through the Suez Canal for a third straight day, the ripple effects of the incident could disrupt trade networks for weeks or even months, choking ports that are already struggling with freight delays, container shortages, and pandemic surges.

Evergreen Marine, the Taiwanese container line that operates the Ever Given vessel which ran hard aground during a sandstorm this week, said Thursday that it had dispatched maritime professional rescue teams from the Netherlands and Japan to help the ship’s captain and the Suez Canal Authority budge the giant ship loose and refloat it.

But some reports now say that officials may have to unload containers from the vessel to lighten its weight and dislodge it from the Egyptian sands, an operation that could take weeks to complete and would worsen existing freight delays across European ports, supply chain visibility company project44 said.

In fact, several containerships waiting for passage through the vital shortcut have already voted with their feet, laying new routes to sail clear around the southern tip of Africa to make their way between Europe and Asia, a move would add nearly two weeks to each ship’s voyage, according to published reports.

Neither option allows ships to deliver their cargo on time, creating a scenario that could create a domino effect, since many of the stalled ships are mega-vessels navigating the Asia-Euro route, making multiple stops in European ports, project44 said. And with even more cargo waiting at Chinese ports for vessels to transport it to those European markets, the same delays are equally problematic in the Euro-Asia direction.

“Once the log-jam is broken, major ports in Rotterdam, Antwerp, and Hamburg will be swamped,” Project44 CEO Jett McCandless said in a release. “That congestion will have rolling effects further down the supply chain for months to come, exacerbating an already problematic  situation at major European ports. With inventories dropping as a result, unfortunately that means the costs will be passed on to the consumer.”

Since marine carriers sail complex routes through multiple ports, any further delay in clearing the wedged Evergreen ship could create “a severe knock-on effect,” agreed Nikolaus Sievers, vice president of global customer success at Slync.io, a logistics software provider for global shippers, logistics service providers (LSPs), and carriers.

“In that scenario, there aren’t enough hours in the day for logistics operators to make up for lost time servicing shippers who are all fighting for the same limited resources and capacity,” Sievers said in a release. “It’s highly likely that shippers moving cargo from East Asia to Europe are right now sending frantic emails to their LSPs and carriers to confirm whether or not their cargo is affected, leaving those service providers to sort through piles of messy data and communications and take action based on what might or might not be delayed.”

As delay and confusion spread, the impacts will be felt by both businesses and consumers, said Tony Pelli, practice director for security and resilience at BSI Group, a London-based business consulting firm.

“Approximately 3.3 million tons, or about $400 million worth of cargo, passes through the canal per hour and this will have far reaching impacts,” Pelli said in a statement. "Companies in Europe that are reliant upon raw materials coming through the canal, such as the auto industry, are likely to be affected as the blockage continues. This could have ripple effects for consumers, especially in Europe, but it would likely take a couple of weeks to begin to feel them.”