For the first time in almost 50 years we have witnessed the blockage of the Suez Canal... due to the running aground of a giant container ship. After six days blocking this vital trade route, the container ship was finally freed. Global trade, our economies are very dependent on shipping. In recent days this dependence has been more evident than ever. In this article we are going to analyze the reasons for the blockage of the Suez Canal and try to answer some key questions that we will answer throughout this article: Are we facing an isolated incident or a sign of what is to come? Has the Suez Canal become outdated? Will the Suez Canal blockade be the end for big ships? Despite the presence of pirates, should we consider alternative routes such as the Cape of Good Hope? Will the Arctic route ever be a viable alternative?
Amazon, Ali Express… almost everything you buy online has traveled by sea.
Those of us who investigate the security of maritime transport frequently insist on the fact that 90% of commerce moves by sea. And that means that the global economy depends on there being no problems in those maritime routes that can be sensed in the following image and can be seen in this video:
The video has been made by Marine Traffic, an application that tracks ships, thanks to the automatic identification system, which is something like the GPS that most ships are required to have on.
The video was made in real time in the months of September and October 2015. It tracks three types of ships: in yellow the container ships, that is, those ships up to 400 meters long, the equivalent of four football fields, and which They carry more than 20.000 containers on board; containers that we later see on trains and trucks and that allow products to reach our stores and homes. Freighters appear in green and oil tankers in red. The more intense the color, the more ship traffic occurs in a given area.
If we look at the video, it is easy to distinguish in red the presence of oil tankers in the Gulf of Mexico and Venezuela. Also the intense traffic on the River Plate in Argentina. And in Brazil, in the ports of Santos and Rio de Janeiro. The Gulf of Guinea is also a critical area for hydrocarbon extraction and that is why we see so many red lines. Without going any further, last year 20% of the crude oil that arrived in Spain came from Nigeria, which is our main supplier. It is, therefore, a strategic area for Spain and also for Europe. Next, the video takes us to the old continent: there you see the traffic in Gibraltar, the strong impact of the ports of central Europe (Rotterdam, Amsterdam, Hamburg), you can even follow the river traffic on the Rhine and the Danube . Then, the Dardanelles and Bosphorus straits, the Suez Canal, the Persian Gulf (those red lines of oil tankers again). And, of course, the enormous container ship traffic in Chinese ports: in just over 10 years, China has gone from having 3 ports on the list of the 10 most important for container ship traffic to having 7. That brilliant image demonstrates its strength. as an exporting country. And finally, we see the Strait of Malacca, a critical area for the economies of China, Japan or Australia.
It is not difficult to visualize on the map the so-called bottlenecks or choke points, those areas of dense traffic in narrow geographical areas, which are critical points for maritime trade. Some are created by humans (Panama and Suez canals) and others are explained by their geographical location (Dardanelles and Bosphorus straits, Bab al Mandeb, Hormuz or Malacca).
An example of the dependence of our economies on maritime traffic is shown in the following image. Of the approximately 57 million barrels of oil that move by sea each day, 33% depends on clear navigation problems in Hormuz and another 28% on a clear route in Malacca.
With this video and these images you will have already gotten an idea of what the blockade of the Suez Canal or any other one of those maritime routes means. No shipping, no shopping. Well, that is exactly what happened last March in the middle of the Suez Canal, through which 12% of maritime trade passes. A huge container ship crossed the canal and blocked the passage to any merchant ship. Hundreds of them crowded at both ends of the infrastructure.
It is true that a case like this is really rare. In fact, the blockade of the Suez Canal had only been experienced twice since its official inauguration, back in 1869. And in both cases due to two separate war conflicts: the Sinai War in 1956 and the Six-Day War in 1967. On the first occasion, the origin was precisely the nationalization of the canal by Egyptian President Nasser, a conflict that prevented navigation for several months. In the second case, the conflict broke out between Israel and an Arab coalition and forced the canal to be closed for no less than eight years, until 1975. Its reopening would be part of the agreement that put an end to the Yom Kippur War (or Ramadan or war Arab-Israeli) of 1973.
But let's return to the present to try to understand how the accident occurred and what questions that have been raised in the media in recent weeks can be answered today.
Why did the ship run aground?
The majority of these types of accidents in maritime transport have their origin in human error. In the case of the merchant protagonist of this story, the Ever given, it seems that complicated weather conditions, with especially strong wind (40 knots) and a dust storm, could have prevented good visibility and caused the container ship to end up tilting until it ran aground.
This ship is one of the largest container ships that navigate the seas and oceans of our planet today. 400 meters long, 59 meters wide, 60 meters high... it can transport around 20.000 containers. In this type of navigation through Suez, these vessels do not usually go alone but with tugboats and pilots with extensive experience. However, from what we know it appears that on this occasion no tugboats were used during the voyage.
In recent decades the capacity of these floating giants has only increased. If in the 1950s and 1960s they could barely store a thousand containers, the latest models, such as the HMM Algeciras, built in South Korea, has been sailing since April 2020 with a maximum capacity of 23.964 containers and a beam of 61 meters. But why are increasingly larger merchants used? Due to economy of scale: the larger the ship, the more efficient the transportation of goods. Using one ship that loads 20.000 containers instead of two with 10.000 containers each means saving fuel, reducing the cost per container as well as pollution. An example of the Suez Canal itself: in 2011, 7.179 container ships crossed it, while in 2018 5.706 did so, that is, 20% less. However, the tonnage that these ships carried on average increased between both dates by almost 53% (Bereza, Rosen and Shenkar, 2020).
Therefore, container ships are becoming larger and this complicates their passage through certain areas. In fact, there are very few ports in the world that can accommodate them. He Ever given It weighs 220.000 tons and its draft is 14,5 meters. Therefore, she should have had no problem crossing the Suez, which allows the passage of ships with up to 20 meters draft and 240.000 tons. But, obviously, a larger size implies a greater risk, as has been demonstrated. In fact, it is not uncommon for these huge ships to lose some containers when they are hit in the open sea by strong storms.
But hadn't the Suez Canal been expanded? Has this work already become obsolete?
Indeed, on August 6, 2015, the new Suez Canal was inaugurated after a year of intense work and some 8.000 billion dollars of investment. With the new infrastructure, it was hoped that the number of ships that could cross the canal each day would double, reaching up to around one hundred merchant ships. The work was reminiscent of the great infrastructures launched by the founder of modern Egypt, President Nasser. It had been decades since the country had embarked on a project with such strong symbolism and led by the Army. And the new work also allowed the Egyptian president, Al Sisi, who had come to power through a military coup two years earlier, to reaffirm a nationalist discourse to strengthen his internal image.
As announced at the time, the new canal would reduce the time needed to cross it almost in half (from about 20 hours to 11 hours), making it more competitive compared to its Panamanian counterpart (18 hours).
By then Egypt was earning about $5.000 billion annually thanks to the canal. The Egyptian Government's forecast was that, with the new expansion, in 2023 revenues would exceed $13.000 billion per year. However, 2020 ended with income from canal transit rights of $5.610 billion, 3,3% less than in 2019. And the number of ships that crossed it in 2020 was 18.829, a figure very similar to that of the previous year, that is, an average of 51 merchant ships per day. Maritime transport, highly dependent on global economic developments, has also been affected by the crisis generated by the coronavirus pandemic, which has had an impact on the canal's profits.
But, in addition, we must take into account that the part of the canal that was expanded in 2015, and that allowed the creation of a road parallel to the then existing one, is located north of the place where the ship ran aground. Ever given, closer to Suez. Therefore, this expansion did not affect the area where the incident occurred. The channel has not become obsolete, then.
However, after the accident, the head of the Suez Canal Authority, Osama Rabie, indicated that he is not giving up an extension of the southern section, right in the area where the ship was blocked, from the current 250 meters to 400 meters. width as well as acquiring cranes that can unload at a height of 52 meters (Ebrahim and Werr, 2021).
What seems clear, as we will see below, is that Egypt will hardly be able to take advantage of the hypothetical compensation to pay for any work.
Who will pay the cost of having the canal shut down for six days? And the delays in deliveries?
The bills to be paid for the blockade of the Suez Canal by the Ever given They will be numerous. Lloyd's List estimated losses of 400 million dollars per hour for global trade (Teoh, 2021). However, it will not be easy to define responsibility. Various law firms already point out that the key element will be the cause of the incident: human error, mechanical failure or force majeure. It does not seem easy to allege weather conditions as force majeure on these ships. Rather, the responsibility is expected to fall on the shipowner and/or the pilots on board the vessel. The insurance, for its part, will cover damage to the ship and its cargo or damage caused by the merchant in the canal. Some analysts consider that insurers and reinsurers will have to pay more than $100 million (Sheehan, 2021). Expenses due to delivery delays are not usually covered by policies (Palau, 2021).
It should be noted that the detained ships will arrive late to the US and Europe, which will subsequently lead to congestion at the destination ports, which in turn will cause further delays, resulting in a delay in their arrival in Asia for loading. new orders. It is estimated that more than 400 merchant ships were held up at both ends during the blockade of the Suez Canal. To resolve this incident that will affect maritime transport for weeks, solutions are already being proposed, such as prioritizing urgent shipments, converting maritime shipments into air shipments, or sending part of the cargo scheduled to be shipped from Asia to Europe by rail (Pitelli, 2021).
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