Suez Canal blockage costing global trade $6 to $10 billion a week: Study
The Suez Canal stepped up efforts on Friday to free a stuck mega vessel, after an earlier attempt failed to end a blockage that has lifted shipping rates for fuel tankers and scrambled global supply chains for everything from grains to baby clothes.
Shipping rates for oil product tankers have nearly doubled this week and several vessels were diverted away from the Suez Canal, an artificial sea-level waterway in Egypt, as a giant container ship remained wedged between both banks on Friday.
The Ever Given, one of the largest container ships in the world, is owned by a Japanese company and operated by a Taiwanese company.
The ship has been stuck in the Suez Canal since Tuesday. Some experts say that freeing it could take weeks.
A Dutch rescue team has confirmed that two tugs would arrive on March 28 to help dislodge the ship after an attempt to re-float it on Friday failed.
The Suez Canal Authority (SCA) said efforts to free the ship by tug had resumed following the completion of dredging operations at its bow to remove 20,000 cubic metres of sand.
The suspension of traffic along the channel linking Europe and Asia has deepened problems for shipping lines already facing coronavirus-related disruption in supplying retail goods to consumers.
The blockage could cost global trade $6 billion to $10 billion a week, a study by German insurer Allianz showed on Friday.
Ratings agency Moody’s expects Europe’s manufacturing and car parts suppliers to be most affected because they operate “just-in-time” supply chains, and said port congestion and further delays to the supply chain were “inevitable.”
Oil rose over 3% on Friday as more than 30 oil tankers have been waiting on either side of the canal since Tuesday, shipping data on Refinitiv showed. However, there is low seasonal demand for crude and liquefied natural gas, which will likely mitigate the impact on prices, analysts said.