"Might Take Weeks" - Suez Canal Still Closed As "Enormous Beached Whale" Ship Remains Stuck

Tyler Durden's Photo
by Tyler Durden
Thursday, Mar 25, 2021 - 06:35 AM

Key Highlights Of Suez Crisis: 

  • A.P. Moller-Maersk and Hapag-Lloyd consider rerouting ships around Cape Of Good Hope. 
  • 237 vessels waiting to transit Suez Canal; the number is up from 185 on Wednesday.
  • Another effort on Thursday to refloat containership stuck in canal. 
  • Dredging around front hull underway. 
  • British government "stands ready" to assist Suez Canal efforts to refloat containership. 
  • Each day the canal is blocked, it halts about $9.6 billion of traffic through the world's most important shipping lane
  • Firm working to dislodge the vessel said vessel could be "stuck for weeks." 

* * *  

Update (1210 ET): As many as 237 vessels are waiting to transit the Suez Canal; the number is up from 185 on Wednesday and 100 on Tuesday. With multiple attempts to refloat the ship (all unsuccessful), the number of vessels waiting to transit the canal will likely increase. This is the moment when part of the global supply chain seizes up. 

* * *  

Update (1147 ET): The technical manager of the mega containership stranded in the Suez Canal said, "another effort to re-float the vessel will be undertaken later in the day after an earlier attempt was unsuccessful," according to Al Arabiya English. 

The shutdown of the world's most important shipping lane appears to be causing all sorts of havoc across the global supply chain. As we noted moments ago, global shippers are rerouting ships from the Suez to around the Cape of Good Hope. 

* * * 

Update (0956ET): Daily Mail's deputy political editor John Stevens tweets the British government "stands ready" to support operations to free the containership blocking the Suez Canal. 

Boris Johnson's spokesman:

"We are ready to provide any assistance that we can but have not been asked yet."

* * * 

Update (0942 ET): The massive containership blocking the Suez Canal remains stuck in place and unable to refloat on Thursday. Each day the canal is blocked, it halts about $9.6 billion of traffic through the world's most important shipping lane.

The Suez Canal Authority's knock-on effects on closing the 120-mile long canal will likely cause shipping traffic jams at both entrances of the canal, delayed shipments, supply chain disruptions, rising prices of certain commodities, and may push up freight rates. 

* * * 

The Suez Canal Authority (SCA) reported Thursday it had suspended traffic along the 120-mile long canal while eight tugboats worked to free a massive containership, according to Reuters

SCA's statement said thirteen vessels had sailed south along the canal on Wednesday and were waiting in the canal's lakes until the containership was refloated. On either side of the canal's entrances, dozens of ships are piling up as the world's most crucial shipping lane grinds to a halt. 

The container ship called the Ever Given, owned by Evergreen Marine Corp., "could be stuck in the canal for weeks," according to the firm working to dislodge the vessel. 

Peter Berdowski, CEO of Dutch company Boskalis which has been tasked to dislodge Ever Given, was quoted by the Daily Mail as saying: 

"We can't exclude it might take weeks, depending on the situation. It's an enormous weight on the sand. We might have to work with a combination of reducing the weight by removing containers, oil and water from the ship, tug boats, and dredging of sand." 

Berdowski compared the 1,312ft-long, 175ft-wide, 200,000-ton vessel to an "enormous beached whale" as he suggested offloading cargo might be one solution to refloat the ship. 

A source familiar with the matter told Bloomberg that Ever Given is "lodged approximately 5 meters into the canal’s bank, hindering efforts to re-float it fully." 

As many as 50 vessels pass through the canal on a given day, which means upwards of 150 vessels could be waiting to transit the canal. By now, some vessels have opted for alternative routes. 

NYMEX WTI crude oil futures are down 2% in the overnight session and don't seem to care about the canal's continued shuttering. Perhaps, oil traders are refocusing on virus troubles in Europe, hindering demand. 

But as we must note, if the SCA were to release a statement indicating a prolonged shutdown of the canal, crude prices would likely continue to rise. This is because 12% of global trade and 8% of liquefied natgas traverse the canal and nearly one million oil barrels each day. 

On top of global supply chains already stretched thin due to the virus pandemic, the world's most important shipping lane is paralyzed.