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The Suez Canal’s blockade will affect container trading and supply chains in Asia

The Ever Given, Taiwan based Evergreen Group’s 400-meter container ship, was jammed on Tuesday March 23 occluding the shortest shipping route from Asia to Europe. Although it was a tremendous relief for world trade when Ever Given successfully re-floated after the pressurised six days, but this blockage already had an adverse effect on the container trade since there are practically no alternatives to shipping goods from Asia to Europe, and the Suez Canal is a vital transportation channel providing the shortest route between Asia and Europe, where it carries nearly 12% of global trade, with 50 cargo ships moving regularly between the Mediterranean and the Red Sea, creating a crucial trade corridor between the two continents. That being said, due to the blockage, over 350 ships, including a significant number of cargo ships, were anchored in order to transit the canal.

According to Lars Jensen, an expert in the container shipping industry, the blockage could cause a delay of 1,10,000 TEUs of cargo, as well as a delay in the movement of 55,000 TEUs of containers back to Asia every day, consecutively causing more delays in having empty containers accessible in Asia, as well as influencing Asia-USEC and Mid-East/India to Europe Suez Canal services. This blockage hence worsened the situation of container imbalance created by the Covid-19 pandemic, which might increase the shipping prices as predicted by G Raghu Shankar of the International Clearing and Shipping Agency in Chennai.

As per the Danish shipping line Maersk, the blockage has already caused a number of additional challenges and backlogs in international shipping transportation that could take weeks, if not months, to resolve.The cargos stuck had only 2 alternatives either to sit and wait at the canal’s mouth or sail thousands of kilometres around South Africa’s Cape of Good Hope. Though latter alternative would postpone cargo arrival by about a week, but decisions were taken close to the point of no return and it was anticipated that this might be reducing the number of cargo ships in the backlog.Unfortunately, this will come at a high cost to the lines since the 9,000 km gives a large fuel expense transporting between Asia and Europe, which will have to be paid by consignees.

Never the less, yet this blockage slowed the arrival of a variety of components and raw materials for European products, including cotton from India for clothing, petroleum from the Middle East for plastics, and auto parts from China, with less direct effect on the United States, which receives the majority of their shipments from Asia on the West Coast.

“As a result, this incident is expected to have a major effect on containerised goods transport, disrupting supply chains in addition to the current challenges faced by the Covid-19 pandemic.”




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