The Suez Canal is open again, but stranded ship's impact will be felt for some time

The mammoth cargo ship is free and the Suez Canal is open again.

As traffic resumed on the crucial waterway, experts say the week-long sea congestion could have lasting effects.

It has already held $ 9 billion a day in world trade, adding further strain to supply chains that have already been strained by the coronavirus pandemic.

The Ever Given saga left more than 400 ships hauling everything from crude oil to cattle, stacking at either end of the canal while waiting for the stranded container ship to come afloat.

140 of them are expected to cross the waterway on Tuesday after 113 crossed overnight, the canals authority said.

Barring unforeseen circumstances, the backlog could be fixed within a week, said Laleh Khalili, professor of international politics at Queen Mary University in London.

But the delays won’t end there.

There is likely to be congestion in European ports where many of the ships are sailing, Khalili added. This bottleneck could last for several months, said Jan Hoffmann, an expert at the United Nations Conference on Trade and Development, at a briefing on Tuesday.

Port residues then determine when containers on the delayed ships can be emptied before they are filled with other goods that are tied to another location.

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“Today’s four or five day delay is a four or five day delay – in a couple of weeks – for someone trying to remove a box from another location,” said John Mangan, professor of marine transportation and logistics at the Newcastle University in England.

There has been a sharp spike in global freight rates in recent months as both production and consumption bounced off their pandemic lows as the global economy began to recover, Manganese said.

This means that delays are associated with significantly higher costs.

Some goods on the delayed ships can now also be spoiled or limited in time – for example until Easter – and could therefore be worthless.

“The timing is absolutely terrible,” said Mangan. “The only thing worse, I think, would be if it might have happened around Christmas time.”

Insurance and legal claims by companies whose ships have been delayed and whose deliveries have been interrupted are likely to continue for some time, according to marine referee Jeffrey Blum.

“I assume that we will not see the end for a few more years because the impact is so great,” said Blum.

Europe and Asia are likely to be hardest hit by the impact of the blockade, said Michael Roe, professor emeritus of maritime and logistics policy at the University of Plymouth, England.

The impact on the United States would likely be limited and indirect, he said.

However, some goods crossing the canal may have been destined for ports in the northeastern United States, Khalili said.

U.S. manufacturing, which is based on components made in locations affected by the Suez Blockade, could also be affected.

“Due to the global nature of supply chains, US-made products will source replacement parts from Europe and vice versa,” said Mangan.

“We call it ‘supply chain contagion’ – the idea of ​​an effect in one place that quickly affects another location.”

This issue was clearly on mind at the White House when news of the Ever Given revived broke.

“Just another reminder of the importance of ensuring the resilience of our supply chains going forward,” said National Economic Council Director Brian Deese said on twitter.

“A settlement”

Around 12 percent of world trade is handled via the Suez Canal, which enabled almost 19,000 ships to sail between the Mediterranean and the Red Sea last year.

A triumphant Egyptian president, Abdel Fattah al-Sissi, said the incident had drawn global attention to the importance of the waterway, an important corridor between Europe and Asia that is helping to shorten journeys and accelerate trade.

“We weren’t hoping for something like this, but fate has done its job. It has shown and affirmed the reality and importance of the canal,” said Sissi as he greeted staff on a visit to the canal authority on Tuesday.

A picture released by the Egyptian Suez Canal Authority shows a man waving the Egyptian flag while the container ship Ever Given is being moved.AFP – Getty Images

While Egypt’s strong leader tried to celebrate his country through the eyes of the world, others saw an opportunity. The incident highlighted the safety of the Russian North Sea route and its “reliability compared to alternative routes,” the Moscow Energy Ministry said on Monday.

Until this week, Suez has been remembered as the heart of an international crisis in the 1950s. While this shutdown could force an overhaul of the way global shipping works, experts believe that the world’s dependence on the Canal is unlikely to change anytime soon.

“I think this is an unfortunate temporary mistake that should be learned from, but I don’t think this will change the way shipping works,” said Blum, the maritime referee.

However, the consequences of the blockade justify a certain “accounting,” said Khalili. Shipping authorities are likely to reassess the way larger ships navigate the canal.

Instead of waiting for it to be vacated, dozens of ships opted for an alternate route around the Cape of Good Hope on the southern tip of Africa – a 3,000 mile detour that could take anywhere from 10 days to three weeks of delays.

Analysts disagree on whether this was a good idea, but the detour gave shipowners at least some security while others were at the mercy of an unsafe salvage operation.

While the incident may have been a “one-off” event that was difficult for anyone to predict, the impact on global shipping should not have come as a surprise to the world, Mangan said.

But with only so many ways in which goods can be moved around the globe, he added, “Suez will last a long time.”

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