Houston We Have A Problem
Over 400 ships are waiting to pass through the Canal and an estimated loss of $9.6 million per day in revenue this is a sticky situation. You don't get much bigger problems than this and call it bad luck with strong winds forcing it to run aground sideways wedging it in rather tightly on both ends.
I am sure many of us have seen the container ship blocking the Suez Canal currently and the ramifications the longer this lasts. When I heard about the blockage I thought a day or two to get this fixed yet now it is being discussed in weeks and not days. Having seen footage highlighting the challenge it only shows how unprepared they were and this is a colossal screw up.
source Salvage teams are flying in as from today it was obvious this vessel is loaded to the brim and needs to be lightened. If they are going to get this ship to move fuel tanks need to be pumped and containers need to be craned off. A floating crane needed for this size ship is not close by and will take time (weeks) to arrive on the scene.
The cost of travelling round the horn of Africa via Cape Town not only delays the global supply chains but also adds an extra cost to every single item that is shipped. Those prices will either be passed on to the consumers or the insurance companies will have to swallow this unforeseen incident which ultimately raises the costs anyway as policies will be increased.
This will create another spike in inflation around the world as everything just becomes that little more expensive. The world economy is shot to pieces already and this is just adding fuel to the fire creating new problems for a large percentage of the world.
Over the last year we saw container shortages being nicknamed the "Black Swan" event which thrown on top of Covid issues with lockdowns has had the logistics companies in a spin.
Unfortuntaely many of the global retailers work to such tight deadlines with almost to the day planning that out of stocks are going to be common over the coming weeks and months. From online shopping to the certain foods you buy in store are going to be seriously affected.
Natural energy resources like oil and gas obviously play a major part in this region and the Suez Canal accounts for 10% of the worlds gas flow through it's route. Even when this shambles comes to an end there is going to be severe port congestions which could take further weeks to clear.
The time saved by using the Suez Canal is around 30 percent considering a
container ship takes 30 days from the East to the UK. The extra 10 days is not just time though considering they can burn 250-300 tons of fuel per day it adds up quickly and runs into the $ Millions on extra fuel consumed.
This seriously highlights how fragile the world we live in is today relying on certain things and having no alternative solutions. We saw this with every country relying on Chinese manufacturers highlighting how we have become so lazy and looking for the cheapest easy alternatives. The balance of world trade is out of sink and countries need to start producing more of their own goods and these things would not be such a big issue.
How long do you think this will last and will we be hearing news of their struggles to clear this mess in 3 weeks time still? No one was prepared for this and this baby is wedged and maybe the entire boat may have to be off loaded and worse case scrapped. This salvage operation is at the cost of the owner as they chartered the boat out.
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