April 20, 2021

News Update

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3 minutes to understand the current Suez Canal block crisis

According to AFP, a spokesperson for Shoei Kisen Kaisha, which owns the long-sale ship, said in an interview on Friday that staff are still working hard to get the 400-meter-long and 59-meter-wide freighter out of trouble.

The Suez Canal, which took a decade in the 19th century and was built by 1.5 million laborers, was “blocked” by a giant container ship on March 23, 2021, paralyzing international shipping, with more than 200 ships Staying around the canal waiting for passage.

What is the latest development of this accident? What kind of “butterfly effect” might the continuous blockage of the canal produce? Why is the Suez Canal the lifeblood of global trade? News Update will explain to you.

The rescue work is still going on, or it may take days or even weeks

According to Agence France-Presse, a spokesperson for Shoei Kisen Kaisha, which owns the long-sale ship, said in an interview on Friday that staff are still working hard to get the 400-meter-long and 59-meter-wide freighter out of trouble.

The spokesperson revealed that the staff are using tugboats and dredgers to crush mud and rocks to get out of the cargo ship, but the company still does not have the exact information on the damage to the cargo ship.

Zhengrong Steamship has apologized for the incident and appealed to the Dutch maritime service company Boskalis for help. A 10-member team from SMIT Salvage, a maritime rescue company under Boskalis, went to Egypt on Thursday to provide assistance.

This company has many legends in the past, including the salvage of the sunken Russian nuclear submarine Kursk in 2001 and the removal of the internal fuel of the Italian luxury cruise ship Concorde in 2012, winning the title of the most daring sea rescue synonymous.

Boskalis chief executive Berdosky told the Dutch television news program Nieuwsuur on Wednesday: “It can be said that it is like a huge whale stranded. I don’t want to guess, but it may take days or weeks.”

Berdosky said that when deciding the best way to move the 400-meter-long container ship, the expert team will evaluate several factors and study how much oil and water there is on the ship. These are all complicated calculations.

An official of the Suez Canal Authority estimated that even if the Long Grant eventually escapes, it may be difficult to continue sailing due to damage, or to be towed to the nearest port of Ain Sukhna or Suez.

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Continued blockage of the canal may affect energy prices and supply of goods 

Shipping experts say that if the canal blockage cannot be cleared in the next few days, some ships may have to pass through the Cape of Good Hope in Africa, which will increase the voyage by about a week or two. The impact of the Long Gift Wheel incident may spread through the global energy supply chain.

The vessels currently stranded in the Suez Canal include dry bulk carriers carrying crops and dry food and tankers carrying crude oil and petroleum products.

The blockage of the canal affected 9% of seaborne oil trade (about 5.5 million barrels per day). Refinitiv’s shipping data shows that since Tuesday, more than 30 tankers have been waiting to pass on both sides of the canal. In the past few days, crude oil prices and transportation costs have also fluctuated because of this accident.

Brent crude oil futures prices rose 3.62 US dollars on Wednesday (March 24) to reach 64.41 US dollars per barrel, while the US WTI crude oil futures prices rose 3.42 US dollars to 61.18 US dollars per barrel. However, both futures contracts fell back more than 1% on the morning of the 25th.

In addition, according to Refinitiv data, the cost of gasoline and diesel from the Russian port of Tuapse on the Black Sea to southern France rose from 1.49 US dollars per barrel on March 22 to 2.58 US dollars per barrel on March 25. The increase was 73%.

In terms of goods supply, Bloomberg News reported on March 25 that Walter Schalka, CEO of Brazilian wood pulp company Suzano SA, pointed out that the blockage of the canal has caused a shortage of global containers, or affected the company’s wood pulp transportation. supply. He warned that if toilet paper manufacturers do not have enough inventory, the supply of toilet paper may be affected.

my country’s Minister of Transport Wang Yikang also posted on his Facebook page on Thursday (March 25) that if the current blockage of the Suez Canal persists for a long time, shipping companies start to detour, and goods destined for the region may be temporarily affected. Singapore The operation schedule of the Port Authority (PSA) may also be disrupted, so that the Port Authority must make early preparations to ensure that the port operation continues smoothly.

Why is the Suez Canal the lifeblood of global trade?

Since the opening of the Suez Canal in 1869, it has been a potential flashpoint for geopolitical conflicts because of its transportation value.

It is the shortest waterway connecting the Mediterranean and the Red Sea, between Asia and Europe. Compared with the longer route through the Cape of Good Hope, passing through the canal can save ships more than a week and a lot of fuel costs.

Because of this, global shipping is heavily dependent on this waterway. According to rough calculations, the single-day maritime transport value of the canal is approximately US$9.6 billion, accounting for 12% of the total global trade in goods. Approximately 19,000 ships will pass through the canal in 2020, carrying more than 1 billion metric tons of freight.

Wang Yikang described that the Suez Canal was blocked, just as a tree fell to block the traffic on the Central Expressway, and other expressways connected to the Central Expressway would also be affected.

The Egyptian authorities just expanded the canal in 2015, but this accident also made the outside world discover that the length of the Long send was still longer than the width of the canal, indicating that the design of the Suez Canal still has great safety hazards after the transformation. It is expected that before this problem is resolved, this central expressway will continue to face the risk of falling trees and blocking traffic.      

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