“Suez Canal blockage” is an important update in international relations. The 1300 feet long watercraft was sunk by Gales on the 23rd of March 2021. The stern and bow of the ship was thrust in the Suez Canal and blocked the entire route until it could be discharged by the Egyptian authorities.
The barrier materialised in the southern part of the Suez Canal and therefore there was no chance of another ship to get in the bypass of the Red sea. Suez Canal Authorities ordered Smith international to manage marine recovery functions. This blockage had a directly bad impact on trade in the Middle East, Europe and Asia.
Suez Canal Blockage
The Suez Canal was built to link the Mediterranean Sea to the northern canal and end with the southern canal to the Red Sea. This canal provides the world’s shortest coupling between Europe and Asia. The Evergreen Egyptian ship was put to the northern Mediterranean Sea at 9.30 GMT and it was requisitioned for more than three months near Ismailia.
The container ship was obstructed when the ship travelled through the canal by the strong winds. It disrupted international trade where many ships were stuck in this blockage. Evergreen was cleared during the 6-day function that included a flotilla of dredging vessels and tug boats.
This canal accounts for 10% of international maritime trade and is the main source of incoming foreign currency in Egypt. More than 1.37 billion tons of shipload was exported by the Suez Canal and it was making the highest transit fees of 6.5 billion Euros in Egypt.
In March 2021, the Egyptian ship Evergreen was blocked with 199000 tons of goods in the Suez Canal by the Sandstorm. For rescue action, Egypt lost $15 million during this blockage and one member of Suez Canal Authority died during this action.
History of Suez Canal Blockage
The Suez Canal was First Time blocked during the 1967 war, after cleaning the vestige of the war, the canal was reopened for exporting goods by the ships in 1972. Again, in the year 1973 during the war between Israel and Egypt, the canal was blocked by the army of Egypt.
Now the Suez Canal was blocked by the Evergreen container and it created a massive jam in the sea. On 28 March 2021, 369 boats passed the canal and this prevented a 9.5 million dollars gain on the trade. Evergreen was to try refloating in the correct direction, however, due to a sandstorm the bow of the ship was stuck in the Great Bitter Lake.
Suez Canal Blockage Effect on trade
The Cargo ship blockaded the Suez Canal and after 6 days it was freed by the SCA. The rescue operation took more than double efforts to refloat the cargo ship in the right direction. Western and eastern countries near the Suez Canal suffered from this blockage. The Suez Canal is the highest shipping medium for exporting grain, oil and refined fuels between west to east.
According to data from Lloyd’s list, Suez Canal held a trade value of up to $9 billion per hour which was almost 12% of international trade. This amount is quite big than $ 400 million, which was the transit fees of international trade per minute. Cargo ship was stuck in this canal for 6 days and the total loss during this period was almost $54 billion.
The real economic losses when the price of gas and liquefied oil increased in several countries due to this blockage of the Suez Canal. Besides the international trade, delay in Evergreen ships affects different businesses due to the blockage of the Suez Canal. Countless operators are joining online and offline for exporting their goods through the ships and Evergreen was blocked in the Suez Canal making shipments delayed and creating an individual loss in their business.
Cost of Suez Canal Blockage
The structure of Evergreen was so big, its length was 400 metres and it could carry 200000 tons of goods with 11 containers across the 18300 countries in the world. The cargo ship was blocked in the Red sea and as a result, the shipping industry was facing a crisis and was losing $90 million on the toll revenue. According to the chairman of SCA, the loss per day after this blockage reached up to $272 million. The owner of the cargo ship calculated a total loss of around 550 million dollars after adding other expenses towards the government of Egypt.
Conclusion
During this operation, one member of the ship was killed, after which SCA asked for compensation from the owner of Evergreen to provide the cost of losses. As per the chairman of SCA, the Suez Canal is to achieve the annual revenue of $15 million transit fee per day. However, the blockage will give a growth of 0.4% on international trade yearly. The increase of the economic loss after addition of commodity charges, operation charges and shipping delay during the blockage.