The United States has offered help to Egypt to unblock the Suez Canal, as the head of the world’s largest shipping company warns companies that depend on just-in-time supply chains will have to resort to theft in essential components.
The warning from Soren Skou, managing director of AP Moller-Maersk, adds to growing concern that disruption to global trade will soon begin to impact already strained manufacturing industries, from cars to plastics, after attempts release of the giant. container ship never given failed again on Friday.
“For goods that are urgently needed, they will have to be replicated and airlifted,” Skou told the Financial Times. “The ships that are there are going to have to wait there.”
The White House said on Friday that the United States was in talks with Egypt on how the United States could “best support” efforts to reopen the canal.
Shipping companies have also raised concerns that billions of dollars in stranded goods awaiting transit through the channel are vulnerable, with a number reaching out to the US Navy over the high threat of piracy.
Skou said the blockage would trigger a series of further disruptions and delays in global shipping that could take months to resolve, even if the growing crisis on the canal could be resolved.
Ana Boata, head of macroeconomic research at trade credit insurer Euler Hermes, said the disruption had “the potential to cost the global economy up to $ 10 billion in lost trade for every day Ever Given block the channel ”.
Bernhard Schulte Shipmanagement (BSM), the technical director of the container ship, said the latest efforts to refloat the 400m-long vessel had failed.
Along with specialist dredgers that work to remove sand and dirt from around the ship, Smit rescue experts are looking to bring in high-powered pumping equipment to remove ballast water from the bow and stern of the vessel. ship, said BSM.
As the canal’s closure has dragged on since Monday, more than 200 ships have dropped anchor near Suez, a choke point through which around 12% of world trade flows, and 137 more are expected to join them within five days, according to Refinitiv.
Shipping companies have started rerouting ships around the Cape of Good Hope in South Africa to avoid the long wait, even though that adds at least seven days to the average travel time between Asia and Europe.
Several Asian automakers rely on the route to transport parts to European factories, increasing the possibility of plant shutdowns across the UK and Europe in a prolonged blockage.
Nissan, which said it was “assessing the impact on our operations,” confirmed that it was using the Suez Canal for all its maritime shipments to Europe from Asia. Honda also said it was monitoring the situation.
Because of the large number of parts they use, automakers hold very little inventory, relying instead on “just-in-time” delivery. Due to delays at sea, automakers often turn to expensive air freight of parts as an emergency measure.
Security concerns have also been exacerbated by the prospect of hijacked vessels crossing high-risk waters off East Africa.
The US Navy told the Financial Times that there had not yet been an impact on naval operations in the region, but companies feared that if the blockade continued, their ships could be at risk.
While East Africa has long been known for piracy, there has been a kidnappings at sea and other maritime crimes in West Africa in recent months.
Ships traveling around the Cape of Good Hope face additional costs for fuel, security and insurance, but these could be roughly equal to the $ 500,000 charge to cross the Suez Canal.
Shipowners say the problem is less about cost and more about ensuring goods get where they need to be, when supply chains from automobiles to drugs are under enormous pressure due to the coronavirus pandemic. The route is also essential for oil, gas, and high demand food items such as coffee.
The Suez Canal in figures
The average number of ships crossing the Suez Canal, 120 miles long each month – over 50 ships per day
Bulk carriers represent nearly 30% of traffic, container ships 25% and tankers 15% of transits
The number of ships that crossed the Suez Canal in 2020 (data provided by Refinitiv)
Rolf Habben Jansen, managing director of Hapag-Lloyd, the world’s fifth largest container ship, said three ships from its alliance with other shipping companies had been hijacked.
The Ever Greet, sister ship of the Ever Given, has also changed course. The Mediterranean Shipping Company, the world’s second largest shipping group, hijacked 11 container ships around the Cape of Good Hope, while two of its ships were ordered to turn around and unload cargo at nearby ports from the Suez Canal.
“Nothing can be done” about the goods stranded on ships waiting to enter the Suez Canal until the stranded vessel is refloated, Jansen added, arguing that it was impossible to unload them in alternative ports to move them by air or rail.
Bigger tugs will be dispatched to where Ever Given was beached to attempt again Monday to refloat the 220,000-ton container ship, Skou said. Maersk owns Svitzer, a towing company participating in the rescue operation.
Releasing Ever Given turns out to be a formidable technical challenge complicated by bad weather. Nippon Salvage, who is part of the rescue effort, declined to comment.
Jansen predicted that it would take “at least a few weeks” for the Suez Canal congestion to subside even if the ship is refloated soon.
The UK P&I Club, a mutual insurer owned by the shipowners, said it provides cover to Ever Given “for certain third party liabilities that could result from an incident like this – including, for example, damage caused infrastructure or obstruction claims. “. The ship itself and its cargo will have been insured separately, he said.
An official at Shoei Kisen Kaisha, the Japanese owner of the Ever Given, said the situation remained “extremely difficult”. The company added that the ship’s hull and machinery coverage was provided by Tokyo-based MS&AD Insurance Group. This type of insurance covers rescue costs, according to insurance experts. MS&AD declined to comment.
Additional reporting by Ian Smith in London, Song Jung-a in Seoul, Hudson Lockett and Nicolle Liu in Hong Kong and Stefania Palma in Singapore