Shipping agents keep close eye on Suez Canal jam
Published: Mar 25, 2021 09:18 PM
Cargo Ship <em>Ever Given</em>, photo: VCG

Cargo Ship Ever Given Photo: VCG

Logistics companies and shipping agents in China, the world's largest goods trading nation, are closely watching the worst shipping jam in years in the Suez Canal after a super-sized containership from the island of Taiwan ran aground in the middle of the vital waterway.

They warned that a prolonged blockage could result in massive consequences for the global supply chain. It's not clear when the problem will be resolved, but the worst-case scenario suggests it could take weeks, and there's already a shipping jam of more than 100 vessels there.

The Suez Canal Authority declared on Thursday that navigation through the Suez Canal remains temporarily suspended.

A Ningbo-based shipping agent told the Global Times that bypassing the southern tip of Africa won't cost extra money, as the extra fuel charge is almost the same as the toll that the canal authority charges. Ningbo Zhoushan Port is the world's busiest in terms of cargo tonnage.

The real difference lies in the extra week's time for the extra distance.

"But I heard that the jam is already fixed," the agent told the Global Times on Thursday, referring to a report by Egyptian media outlet the Egypt Independent that the grounded vessel had been partially refloated.

However, Reuters reported on Thursday that work to dislodge the 400-meter, 224,000-ton Ever Given slowed overnight Wednesday due to a low tide, and that ship-tracking data showed the position of the mega containership had only made minor changes over the past 24 hours. 

A source at the Port of Guangzhou, the world's fifth-largest, told the Global Times that the impact of this jam would be "definite and global."

A grain trader based in East China's Fujian Province said that Ukraine-origin grain bound for China will have to be re-routed via Cape of Good Hope if the blockage can't be resolved quickly. That will take more time and cost more money.

There's been talk on Sina Weibo that due to the incident, the flow of goods between China and Europe may be affected, and this will provide an opportunity for the operators of the China-EU cargo train service to hike rates. 

However, an employee at Chengdu International Railway Logistics Service told the Global Times that any chain effect wouldn't be that fast, and her company currently has no plan to raise rates.

The Suez Canal in Egypt is one of the world's busiest shipping channels for goods, oil, grain and other products linking Asia and Europe. About 12 percent of total global trade of all goods goes through the vital waterway.

It is estimated that one-tenth of last year's traffic volume in the Canal, or 1,900 ships, were Chinese ships.

After an overnight surge, global crude prices receded as concerns over weakened demand from tighter pandemic controls in Europe weighed in.

Bloomberg reported on Thursday that the blockage is costing $400 million an hour and crude tankers carrying 13 million barrels could be affected.

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University said since this is the most important waterway, in which every country has a big stake, every effort will be made to resolve the problem as a prolonged blockage will have unimaginable consequences. 

"The matter will likely be resolved within a matter of days," Lin told the Global Times on Sunday. "This is not some peripheral area -- it is the heart of global trade."

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