The Irish Times view on the Suez Canal blockage: a shock to global shipping
Industries depending on global supply chains may well have to reassess of their whole operations
It took six days, 11 tugboats, multiple dredgers, including a specialised suction dredger that can extract 2,000 cubic metres of material per hour, and a full moon’s spring tide to move the MV Ever Given.
The grounding of the 400-metre cargo ship, laden with nearly 20,000 containers, had led to a build-up of almost 400 vessels at the north and south entrances to the Suez Canal, which carries about 12 per cent of global trade. Tankers loaded with 9.8 million barrels of crude, about a tenth of a day’s global consumption, were waiting to enter the canal.
There had been fears that floating her off would take weeks at an estimated cost of €7 billion in daily delays but canal officials expressed the hope yesterday that all the delayed shipping could now pass through within three to 3½ days.
In the 19th century the canal’s opening cut the distance between London and what is now Mumbai in two to some 10,000km, transforming the global economics of sail versus steam. Last year 18,840 ships traversed the canal without an incident – the alternative is a journey around the Cape that can add weeks to deliveries and more than €19,000 a day in fuel costs.
But in the aftermath of the grounding, the marine freight industry and industries depending on global supply chains may well have to engage similarly qualitative reassessments of their whole operations.
The just-in-time delivery system, key to many industries’ ability to reduce the cost of stockpiling, and hence of price, could be broken irretrievably by a second such grounding. And the strategic calculations of regional powers will need to be reviewed as the requirement to defend supply chains at global pinch points comes sharply in to focus. A crisis in Suez, or the Panama Canal, or the Strait of Malacca, or the Strait of Hormuz could rock global markets.
The grounding will also probably lead to a reassessment of alternative routes, notably the newly emerging summer route across the Arctic made possible by global warming. It’s an ill wind.