Q&A: What's happening in the Suez Canal and how might it affect me?

The Ever Given got stuck in the Suez Canal this week and highlighted the importance of one of the world's most vital trade routes. 
Q&A: What's happening in the Suez Canal and how might it affect me?

A satellite image from Maxar Technologies shows the cargo ship MV Ever Given stuck in the Suez Canal on Saturday. Picture: AP

The Ever Given container ship got stuck in the Suez Canal on Tuesday — and its impact on global trade traffic has been enormous. 

Here, the Irish Examiner takes a look at the situation with Aidan Flynn, general manager of the Freight Transport Association of Ireland, who explains how the disruption might impact Ireland. 

What is going on in the Suez Canal? 

A large container ship has been stuck across Egypt’s Suez Canal, blocking access to one of the world’s more important shipping routes.

The Ever Given, a Panama-flagged, Japanese-owned vessel, was on the way from China to Rotterdam when high winds caused its bow to plough into the eastern bank of the canal about 6km north of the Southern canal entrance, near the city of Suez.

The incident led to a major maritime traffic build-up, with some 321 ships now stuck outside the canal’s entrance, and hundreds more en route to the waterway.

How significant is the blockage?

It's significant. And what's more, it's not just the cargo that's on the stranded Ever Given that has been impacted. 

"It's not just what is on this container ship," said Mr Flynn. "It's the other 200 or 300 container ships that are blocked on the canal and can not go anywhere else."

Mr Flynn said supply chains have been and will be significantly impacted by the blockage and that this will have a knock-on effect for Irish and European consumers importing products via the Suez Canal.   

Adjusting the shipping routes to go around the Cape of Good Hope adds time — as much as a week, according to Mr Flynn — and the price of this extra cost will be passed on to the consumer. 

There are additional costs that will definitely have to be passed on to the consumer because you could be talking about over €100,000 of additional fuel being burnt going in that direction as well. 

"So there are consequences. Basically costs and time."

Mr Flynn said the longer the blockage lasts, the more likely it is that goods making their way to consumers will be delayed.

The incident, as a result, is also having knock-on effects  to arbitrage flows, insurance rates, freight costs, and oil costs. 

What are the likely effects of the disruption for Ireland?

There are 20,000 containers on the Ever Given alone. So apart from the actual goods being shipped, the shortage of containers available to export products may impact Irish businesses, said Mr Flynn. 

"I suppose it's absolutely everything," he said. "You have got big massive operations and businesses, retailers... You could have everything under the sun on it." 

Authorities are preparing to make new attempts to free the Ever Given, which is stuck in Egypt's Suez Canal. Picture: AP
Authorities are preparing to make new attempts to free the Ever Given, which is stuck in Egypt's Suez Canal. Picture: AP

A prolonged closure of the canal would cause delays in the global shipment chain. Some 19,000 vessels passed through the waterway last year.

One Irish maritime legal expert said the fallout from this will be felt in Ireland, as stock, manufacturing ingredients, and other cargo affected is “undoubtedly” bound for Ireland.

“Components for manufacturing, ingredients for the pharmaceutical industry, everything that you can think of and that's just on that ship itself, not to mention the other hundreds that are affected," said Michael Kingston.

Who is taking responsibility for the ship? 

Shoei Kisen Kaisha, the Japanese firm that owns the Ever Given, issued an official apology on Thursday.

The company said it was working with relevant authorities to resolve the issue as quickly as possible

Have there been any attempts to free the ship yet? 

Bernhard Schulte Shipmanagement, the technical manager of the Ever Given, said an attempt to free the vessel on Friday had failed.

In a press conference on Saturday, lieutenant general Osama Rabie, the head of the canal authority, told reporters that they could not lay out a set timetable for when the ship might be dislodged.

He said he remained hopeful that a dredging operation could free the Ever Given without having to resort to removing its cargo to lighten it.

So what's next?

Peter Berdowski, chief executive of Boskalis, the salvage firm hired to extract the Ever Given, said the company hoped to pull the container ship free within days using a combination of heavy tugboats, dredging and high tides.

He had explained on Friday that the front of the ship was stuck in sandy clay, but the rear "has not been completely pushed into the clay and that is positive because you can use the rear end to pull it free".

A work crew using excavating equipment tries to dig out the Ever Given. Picture: AP
A work crew using excavating equipment tries to dig out the Ever Given. Picture: AP

Mr Berdowski said two large tugboats were on their way to the canal and that the company aimed to harness the power of the tugs, dredging, and tides to free the Ever Given. 

He said that "we hope that will be enough to get the ship free somewhere early next week".

And if that doesn't work?

The company will remove hundreds of containers from the front of the ship to lighten it, effectively lifting the ship to make it easier to pull free, Mr Berdowski said, adding that a crane was already on its way that can lift the containers off the ship.

The White House has offered to help Egypt reopen the canal, with US president Joe Biden saying: "We have equipment and capacity that most countries don't have and we're seeing what we can do and what help we can be."

-With reporting by Press Association

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