On March 23, the world's largest container ship, the "Changci" operated by Taiwan's Evergreen Line, accidentally ran aground while passing through the Suez Canal and blocked the entire river, unable to move, causing years of Come the worst shipping congestion.
Why is the world economy so "painful"?
Due to its unique geographical location, the Suez Canal provides the shortest sea passage between Asia and Europe. Maritime transportation is the cheapest means of transportation. More than 80% of world trade volume is transported by waterway, and 12% is transported through the Suez Canal.
As one of the world's most important shipping lanes, the Suez Canal's blockage has put a chokehold on the global supply chain.
Global trade loses $400 million every hour
The Suez Canal is one of the most important shipping lanes in the world. According to CNBC, according to data from the Suez Canal Authority, nearly 19,000 ships passed through the Suez Canal in 2020 alone, with an average of 51.5 ships per day.
According to a list from shipping data and news company Lloyds, global trade losses caused by cargo ships blocking the Suez Canal are approximately US$400 million (approximately 2.4 billion yuan) per hour.
The Suez Canal not only supports logistics in Europe and Asia, it is also one of Egypt's main sources of foreign exchange. Officials from Egypt's Suez Canal Authority said that the Suez Canal's daily economic losses due to the blockage are as high as US$12 million to US$14 million.
Some analysts say that if the congestion continues, the supply of items will continue to be in short supply and there will be insufficient goods. The cost of daily necessities will rise, and the corresponding prices will also increase.
Shipping market prices may rise sharply
Market participants believe that the global container shipping industry is currently in a serious bottleneck period, and this accident may bring a "domino" to the shipping industry supply chain. With a domino-like impact, shipping market prices may rise sharply.
"Nihon Keizai Shimbun" reported that since the beginning of this year, as the global economy has gradually recovered, shipping prices have risen sharply. The new Suez Canal channel disruption may make the global shipping market more volatile. Unstable.
According to a report by the Russian Satellite News Agency citing Bloomberg on the 26th, the blockage has blocked the passage of nearly 10 billion U.S. dollars of cargo, causing the price of maritime freight to skyrocket. For example, due to the grounding of the cargo ship, the price of transporting a 40-foot container from China to Europe has risen to nearly US$8,000 (approximately RMB 52,328), nearly three times more than a year ago.
Leading to fluctuations in global crude oil prices
As of the close on March 24, the price of light crude oil futures for May 2021 delivery on the New York Mercantile Exchange rose by $3.42, closing at US$61.18 per barrel, an increase of 5.92%. The price of London Brent crude oil futures for delivery in May 2021 rose by US$3.62 to close at US$64.41 per barrel, an increase of 5.95%.
Mezzat Youssef, former chairman of the Egyptian Petroleum Corporation and an international energy expert, said that the Suez Canal is particularly important for global oil supply and that the rapid reopening of the Suez Canal can prevent oil price fluctuations.
Phil Flynn, senior market analyst at the U.S. Price Futures Group, said on the 24th that traffic obstruction in the Suez Canal will inhibit the key throat of global oil exports.
The Pentagon said the activities of U.S. warships will be affected
Pentagon officials said on the 28th that the continued traffic disruption caused by the grounding of a cargo ship in the Suez Canal will affect the activities of U.S. warships, but emphasized that the Department of Defense has other support means of action in the region.
U.S. Navy public affairs officer Rebecca Ribarich said, “We will not talk about specific operational impacts. The Suez Canal is an essential maritime transportation hub, and the channel will be suspended for as long as However, we have other capabilities to mitigate the impact and expand support for operations in the U.S. Central Command area of ??responsibility."
Some experts warned. , the growing backlog of ships on both sides of the Suez Canal will bring new challenges, including the inability of some companies to afford additional sea voyage time and the risk posed by piracy. Currently, more than 300 ships are unable to pass through the canal.
US experts said, “If more and more ships sail along the African coast due to this incident, then in areas where pirates are often found, especially in the waters around Somalia and Yemen, there will be a need to strengthen Safety guarantee. "
Widening, diversion, compensation... the problem of "ship jam" in the canal is not over yet
>>Why not widen it?
The Suez Canal is 193.30 kilometers long, 24 meters deep, with an average width of 205 meters, of which the widest point is 345 meters. The average width between channel buoys is 135 meters. It is divided into a 22-kilometer-long northern section and a 162.25-kilometer-long section. the main section and the 9-kilometer-long southern section.
In August 2015, the Egyptian authorities opened the "New Suez Canal". The completed projects include digging a new 35-kilometer river channel and widening and deepening an old 37-kilometer river channel. The "New Suez Canal" can accommodate ships with larger tonnage.
These two parallel channels are located in the northern section of the Suez Canal, and the location where the "Changci" ran aground this time is in the southern section of the canal. Therefore, there is no alternative channel to choose from, which makes entering from the Red Sea The access to the canal was completely blocked.
Since this waterway is so important and so afraid of being blocked, why not widen and dig deeper? In fact, the Suez Canal has been widened, deepened, and transformed since it was opened to navigation. The latest renovation was completed in 2015. Its main content was to increase the "bypass" section of the canal.
But the reality is that the result of each modification is an increased risk of blockage. Analysts say that in order to reduce transportation costs, every time the canal is renovated and the "release" standards are raised, shipowners and carriers will tailor new and larger "top-barrel ships" accordingly.
In addition, repeated widening projects will undoubtedly increase the cost of sea transportation and may lose the original price advantage.
>>Who will compensate for the huge losses?
From rescue costs to cargo delay costs, who will pay for the huge losses caused by the "ship blockage" in the Suez Canal is still divided.
Osama Rabie, Chairman of Egypt’s Suez Canal Authority, stated on the 27th that the Suez Canal Authority will not file relevant claims for the time being until the results of the accident investigation are released, but will retain the right to claim against the responsible party. Pursue reparations.
However, Rabie emphasized that bad weather may not be the main cause of the accident, but may be caused by technical or human errors.
Taiwan Evergreen, which leased the "Changci", previously stated that the ship's owner, Japanese shipowner Shoei Kisen Co., Ltd., should be responsible for all losses. It is reported that the insurance amount of the ship itself may be as high as 200 million US dollars.
>>Is there no other shortcut to global shipping routes?
The management of the Suez Canal said that cargo ships can choose to wait or go around the Cape of Good Hope at the southern tip of Africa. However, no ships are currently choosing to make a detour. Waiting, not knowing when it will be opened, costs extra every day; but going around means weeks of extra travel and associated costs.
In addition, taking this opportunity, Russia also began to promote the Arctic waterway.
Kojonov, the Russian special envoy to the Arctic Council, said that countries need to consider routes other than the Suez Canal, and the Arctic route is an obvious new option.
Kojonov even believes that even if the Suez Canal is restored to traffic, global trading partners should consider the Arctic route. Compared with the Suez Canal, the Arctic route can shorten the sailing time between Europe and Asia by 15 days. Especially in summer, according to the current earth climate conditions, the Arctic shipping route will be ice-free for about thirty or forty days every year.
But this is not a good choice for all parties. July to September every year is the golden time for the Arctic Passage. In addition, the Arctic waterways also have requirements for the ships themselves, which must have ice-breaking functions and have higher requirements for ship safety control.