The Suez Canal Blockade and the Effect on Your Supply Chain

The Suez Canal Blockade and the Effect on Your Supply Chain

Martijn Rijk
Martijn Rijk
Project Manager Marketing

March 23rd was a day everybody in supply chain and logistics will remember for a long time. The Ever Given, a 400-meter long container ship, ran aground in the Suez Canal. The Ever Given is a Gold-class container ship with a capacity of 20,000 containers. What caused the vessel to run aground is still under investigation, but the heavy winds were a factor for sure.

An hour ago, the blockade was lifted and shipping through the Suez Canal could be restarted. The vessel was blocking the canal, and no ships could go through. With 10% of the world’s cargo moving through the Suez Canal, this is a big problem. Over 200 ships are waiting to go through the canal. Five of those are similar in size to the Ever Given; there are also over 40 bulk carriers and more than 20 tankers awaiting passage. Some ships even have livestock on board, so a long waiting time may cause food and water shortages.

What are the Consequences?

More important than the cause of the accident are the consequences for your business. One thing is for sure: A lot of cargo will arrive late because of the blockage. Now the blockage of the Canal clears, it will take time to clear the backlog of ships.

The blockage also means a peak in ships arriving at ports. This will add additional waiting time for vessels that are already delayed.

Lloyd’s List has estimated that every day the Suez Canal is blocked, an additional 9 billion dollars worth of goods is delayed.

Supermarkets and other retail outlets may face empty shelves for some of their products. Production companies that have parts or raw materials coming are impacted, with production processes potentially grinding to a halt because of missing components. Businesses can counter some delays by using air freight to fly in urgent supplies, but the costs are much higher.

Some shipping companies have decided to turn around or re-route their vessels to take the longer route around the Cape of Good Hope. This journey adds a week to the sailing time and additional extra costs.

Not Weeks but Months

The Suez Canal blockage will not only impact the goods that are waiting to go through the canal now. There is also a significant knock-on effect. It could take months for global supply chains to recover from this disruption. A week-long blockage of such a vital artery means that many ships and materials are in the wrong place at the wrong time.

These problems add to the struggles global supply chains faced because of the worldwide pandemic that started in March 2020. The prices for shipping a container from China to Europe have already tripled since November. The blockage of the Suez Canal isn’t going to have a positive effect on these prices.

Take the Load off Your Mind

We can only process your documents and customs declarations once ships have arrived. We are ready for the uptick in work once the backlog of vessels starts arriving at European ports. Our customs specialists will Take the Load off Your Mind.