Efforts to dislodge the massive Ever Given container ship blocking the Suez Canal will take at least until next Wednesday, raising the prospect of wider impacts from the incident which has already impacted the flow of oil to grains and rail cars.
The task of relaunching the 200,000-ton vessel, still firmly stuck on the vital maritime trade route, will take around a week of work and potentially more, said people familiar with the matter, who requested anonymity to discuss private details. The rescue efforts were initially only to last a few days.
Work done since Tuesday by tugs and excavators – tiny equipment compared to the 400-meter-long vessel – has so far failed to attempt to clear the road, and the queue of ocean carriers laden with billions of dollars in oil and consumers. commodities rose to nearly 240 from 186 on Wednesday, according to Bloomberg data.
If containers can be left aboard the Ever Given, the refloating work is expected to be completed on Thursday, aided by higher tides, according to Randy Giveans, senior vice president of Equity Research for Energy Maritime at Jefferies LLC. If the cargo needs to be unloaded or if major repairs need to be made on the canal itself, “the downtime could certainly be at least two weeks,” he said.
Ships slated to cross the Suez Canal are starting costly and lengthy detours around Africa as the shipping industry scrambles to keep deliveries moving. Shipping costs are also rising – the price to ship a 40-foot container from China to Europe has almost quadrupled from a year ago – adding a new burden to already shocked global supply chains. ‘a pandemic that has wreaked havoc with shortages and delays.
South Korean company HMM Co. ordered a container ship that left the UK on Monday to turn away from the Cape of Good Hope to avoid the traffic jam. According to Kpler analyst Rebecca Chia, at least seven LNG ships have had routes adjusted away from the channel, and major shippers, including AP Moller-Maersk A / S and Hapag-Lloyd AG, are also investigating the detours.
The blockage of the canal is currently holding back around 2 million barrels a day of oil flow, according to Braemar estimates, and snarling bulk carriers that ship products from wheat to iron ore. Global manufacturers are already bracing for delays in shipping finished products and critical materials to their production lines.
A list of cargoes aboard an HMM Co. ship waiting outside the canal to return to Asia gives an indication of the large number of industries affected by the disruption, with goods on board including lumber, machinery , frozen beef, paper, powdered milk, furniture. , beer, frozen pork, automotive components, chocolate and cosmetics.
Caterpillar Inc., the largest machinery producer in the United States, said it faces shipping delays and is even considering airlift products if needed, while Japanese battery supplier Envision AESC electric vehicle, said it depended on the Suez Canal for some electrode imports.
Mark Ma, owner of Seabay International Freight Forwarding Ltd., a Shenzhen-based company that handles Chinese products including toys, pillows and mattresses sold on platforms such as Amazon.com Inc., said his company had 20 to 30 containers on ships waiting to cross the blocked canal.
“If it can’t be resumed in a week, it will be horrible,” Ma said. “We will see freight rates soar again. Products are delayed, containers cannot return to China, and we cannot deliver more goods. “
Ships currently outside the Red Sea that plan to use the Suez Canal will have to decide to re-route around Africa, adding 10 to 15 days to their voyages, according to Giveans. Ships lining up at either end of the Suez Canal area will likely wait to determine how long the crossing will be closed before making the decision to divert, he said.
For container lines that carry around 80% of global merchandise trade, a prolonged bottleneck between Europe and Asia may disrupt delivery schedules set months in advance so importers can plan. their purchases, manage inventory and keep store shelves in stock or production lines running.
The problem is getting worse with each day that container ships have to wait. Ships arriving several days late cannot be emptied and reloaded in time to make the scheduled return voyage. This leads carriers to cancel their trips – further limiting capacity and driving up freight rates.
A rerouting around the Cape of Good Hope in South Africa would add 6,000 miles to the trip and something like $ 300,000 in fuel costs for a super-tanker delivering oil from the Middle East to Europe. Shipping brokers report that oil traders are increasingly hiring tankers with “just in case” options to navigate around Africa if the blockage persists. Ships traveling empty to collect oil in northwestern Europe could be delayed, forcing exporters in the region to seek alternative carriers, according to those involved in the market.
What a long Suez shutdown means for the price of oil: Julian Le
Charter prices for tankers in some areas have increased since the lockdown appeared. Suezmax ships, which typically carry 1 million barrels through the canal, are now fetching around $ 17,000 a day, the maximum since June 2020. If more ships are forced to sail around the southern tip of Africa, that will increase rates as travel times increase.
(Updates throughout with details)
With help from Stephen Stapczynski, Jack Wittels, Shiho Takezawa, Christian Wienberg, Kyunghee Park, Jinshan Hong and Sheela Tobben.