A giant container ship has been wedged sideways after running aground in Egypt’s Suez Canal. Still blocking almost the entire width of the canal three days later, it is causing a massive shipping jam in one of the world’s busiest waterways that links the Red Sea and the Indian Ocean to the Mediterranean Sea.
If, as now expected, it takes weeks to move the ship, the Ever Given, international shipping and global supply chains will be severely disrupted. The blockage highlights the risks posed by the profit-driven shipping industry as more and more giant ships traverse maritime choke points such as the Suez and Panama Canals, the Strait of Hormuz and the Malacca Strait. These risks are set to increase as ships get bigger and waterways become ever more congested.
Two separate incidents occurred in 2016 when stranded ships blocked the canal, in one case for two days. But that ship was only half the size of the Ever Given. Container ships have almost doubled in size over the past decade as global trade has expanded, making it harder to move stranded ships. The pandemic has increased the volume of online ordering, prompting ships to carry more and more containers and increasing maritime congestion.
According to reports, the MV Ever Given, a fully laden 220,000-metric-ton container ship and one of the world’s largest, was on its way to Rotterdam from China when it got caught in a khamaseen sandstorm, a hot sandy wind that blows across Egypt and the Levant from the south at this time of year. The Suez Canal Authority (SCA) said that the dust storm knocked out power to the ship before it ran aground.
However, the Egyptian web site Cairo24 quoted a Suez Canal worker as saying that a “sudden technical failure” of the ship’s “machines” caused the vessel to hit land on both sides of the canal, jamming it. Bernhard Schulte Shipmanagement, the ship’s technical manager, denied this, saying that “initial investigations” had ruled out “any mechanical or engine failure as a cause of the grounding.” It added that all 20 of its crew are safe and that there are “no reports of injuries, pollution or cargo damage.”
The ship, built in 2018, is owned by the Japanese company Shoei Kisen Kaisha, a subsidiary of Imabari Shipbuilding, Japan’s largest shipbuilder. It is operated by the Taiwanese company Evergreen Marine Corporation, with different aspects of the ship’s operations subcontracted out to other firms and flagged in Panama.
Shipping lines shop around for countries with looser regulations in a system referred to as “flags of convenience” that enables them to pay lower wages, provide worse accommodations for their crew who are typically Filipinos, Bangladeshis, Chinese and Indonesians, and cut corners on maintenance. In 2019, ships registered to Panama accounted for 30 percent of all ships detained for failing port inspections across the Indian Ocean.
Two years ago, the Ever Given moved too close to Blankenese ferry pier, below Hamburg, brushing a small local ferry boat on the Elbe river, which was enough to inflict heavy damages on the ferry. Immediately after, the authorities issued a traffic ban on the Elbe due to the high winds.
The Ever Given ran aground on Tuesday, shortly after entering the southern end of the canal, fifth in line with many other vessels behind it. The 120-mile-long Suez Canal, despite a $9 billion upgrade launched by President Abdel Fatah el-Sisi in 2015 as one of his flagship megaprojects that enriched military-owned contractors, is essentially a series of narrow canals linking three lakes that takes around 11 hours to transit. For much of its length, ships must travel in a one-way convoy system a mile apart under the guidance of Egyptian pilots and crew who take over from the vessel captains to steer them through the narrow channels.
The pilot has to manage the low-pressure areas created by the moving vessel and if it encounters a high-pressure area, the combination can create suction, pulling the back of the boat towards the bank and the bow towards the centre of the canal, with a high wind turning the bow of a high container ship even farther towards the opposite bank.
Gregory Tylawsky, a ship captain with the Maritime Expert Group, told the Wall Street Journal that high winds can make it more difficult for pilots to steer out of this situation, particularly for heavily stacked container ships carrying a broad wall of boxes at least nine-high atop the deck against which gusts will push. He said, “To correct for this movement, the pilot has limited abilities due to the massive weight and length of this type of ship.”
Eight giant tugboats are now struggling to re-float the ship, while dredgers and diggers are cutting away at the sandbank near the vessel. If the tugboats are unable to drag the ship away from the banks, then a salvage crew will have to lighten it by removing containers, pumping the water out of the tanks that serve as ballast and dredging around the bow and stern. Once the vessel is freed, it is likely to be towed to Suez city for a technical assessment before being allowed to complete its trip.
In a similar incident in 2016, it took a week to unload the fuel and 12 tugboats to free the CSCL Indian Ocean grounded in the River Elbe, on the approach to Hamburg, after her rudder malfunctioned and she ran aground at high tide.
According to Lloyd’s List Maritime Intelligence, more than 185 tankers carrying oil and gas, along with bulk vessels hauling grain, are now waiting to enter the canal, with dozens stuck in the canal itself. While some traffic may be diverted along a parallel channel, it is unclear that this will relieve the congestion.
Lt. Gen. Osama Rabie, head of the Suez Canal Authority, tried to downplay the severity of the incident, but gave no indication when the ship might be re-floated. He said that the Egyptian authorities were now discussing paying indemnity to the waiting ships, implying negligence on the SCA’s part. According to the web site Egypt Watch, the announcement caused surprise in Egypt as the incident was only disclosed after the international news agencies reported it, amid silence from Egypt’s media and the SCA.
Such is the integrated nature of global production and distribution that unless the ship is freed within a few days, shipping moving between the Indian Ocean and the Mediterranean may be forced to re-route around the southern tip of Africa, adding up to two weeks to the journey. It will exacerbate the shortage of containers ships and create delays, shortages of goods and higher prices, with oil prices already rising seven percent in response to the news of the blockage. The canal handles about 30 percent of the world’s shipping container volume and about 12 percent of international maritime trade, forming a crucial link for oil, natural gas and cargo shipping between the Atlantic and Pacific Oceans.
The stranding of the Ever Given is the latest incident to affect mariners amid the pandemic. According to the International Maritime Organisation, some 400,000 seafarers have been stuck on board vessels due to border closures and immigration restrictions aimed at containing COVID-19. They continued to work, but were unable to be relieved, in a deepening crew change crisis that threatens trade and maritime safety while demands on shipping have increased, adding to the pressure on tired sailors. Others were left onboard, often without assistance, wages or supplies for months on end.
The blockage in the Suez Canal is also a significant crisis for Egypt, where the canal is not only a symbol of the country’s international significance. The 50 ships that transit the canal every day bring in around $6 billion a year in foreign exchange earnings—albeit only half that anticipated after the 2015 upgrade to the canal—to the Egyptian economy, which was already struggling even before the pandemic. Egypt’s foreign debt has risen to $123 billion, and the poverty rate has risen to 33 percent as a result of inflation caused by Egypt’s floating currency, a key demand of the International Monetary Fund.
While the canal’s blockage, threatening the disruption of supply chains and a spike in oil prices, will have an impact on the so-called “real economy,” with potential job losses and rising fuel prices affecting living standards, the disaster in the Suez Canal had no appreciable effect on the stock markets, which have continued their dizzying rise.