The Suez canal, a major waterway blocked by a huge container ship that ran aground on Tuesday, remains blocked despite efforts to dislodge the vessel. Media reports say this has caused a massive queue of more than 150 containers in the Suez region impacting both global shipping traffic as well as oil prices on Wednesday.
It is unclear how long it will take to move the ship. Some experts say it could be done over the next few days while others have warned it could take weeks.
The ship is blocking the path of other vessels travelling in both directions across the Suez, bringing 13% of the world’s trade to a halt. About $10bn (£7.3bn) worth of goods is expected to join the jam every day until the container is moved out of the way.
Egyptian tug boats have so far failed to pull the ship free and on Thursday morning it was reported that low tide has slowed efforts to dislodge it.
The Suez Canal Authority has said "the floatation efforts included towing and pushing the grounding vessel using eight large tugboats; largest of which is BARAKA 1 with a towing power of 160 tons."
It added that it was trying to rebalance the 224,000-tonne ship in the hope that a high tide on Wednesday night would create enough extra draught to free it.
According to Bloomberg, an "elite team" is getting ready to free the massive container vessel and dredgers are still trying to loosen the vessel before any attempt to pull it out.
It quoted one expert as saying the best chance for returning shipping to normal may not come until Sunday or Monday.
But Peter Berdowski, CEO of Dutch company Boskalis, which is trying to free the ship, said it was too early to say how long the job might take.
“We can’t exclude it might take weeks, depending on the situation,” Berdowski told Reuters.
“It is like an enormous beached whale. It’s an enormous weight on the sand. We might have to work with a combination of reducing the weight by removing containers, oil and water from the ship, tug boats and dredging of sand," he added.
Around 50 vessels per day use the Suez Canal, according to Panjiva, the supply chain research unit of S&P Global Market Intelligence. Container ships accounted for 52.7% of the tonnage in 2019 transiting the canal including shipments from Asia to Europe and the US east coast as well as vice-versa.
The canal has had to contend with ever larger container vessels using the average tonnage per container ship reaching 119,000 tons in the 12 months to 28 February, 2020 from 93,500 in 2015, Panjiva said.
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"The Suez jam is still very much headache for international trade, which is threatening the international supply chain. Efforts are being made to dislodge the ship, but the reality is that a matter doesn't only rely on the expert team, but luck also needs to play its part," said Naeem Aslam, chief market analyst at AvaTrade.
"A high tide isn't expected before Sunday, and this means that shipping traffic is likely to remain jammed for a few days," he added.
The Ever Given was launched in 2018 and is owned by Japanese firm Shoei Kisen Kaisha. It is chartered by Taiwan-based Evergreen Marine and a German company called Bernhard Schulte Shipmanagement (BSM) is responsible for its day-to-day operational running.
"BSM’s immediate priorities are to safely re-float the vessel and for marine traffic in the Suez Canal to safely resume. The continued efforts of the Suez Canal Authority and those involved in ongoing re-floating operations are greatly appreciated," the company said in a statement.
"It’s one of the largest container ships in the world – 400 meters long, somewhere between the Eiffel Tower and the Empire State Building – and is fully loaded, so it’s really, really stuck," said Marshall Gittler, head of investment research at BDSwiss Holding.
He estimates are that the ship may be blocking 2 million barrels a day of oil and petroleum products.
The Ever Given is able to carry the equivalent of 20,000 units of 20ft containers (teu), twice as much as the largest ships afloat just a decade ago, The Telegraph reported.
"Although such ships have brought great efficiencies to their owners, they have been criticised for slowing down supply chains and causing accidents in ports and waterways they are too big for," the publication said.
It also said 19,000 ships pass through the canal every year.
Earlier in the week on Tuesday, oil futures dropped as much as 6% amid concerns that the COVID-19 third wave could lead to oversupply in the market.
On Wednesday they rebounded after news that the canal, a key waterway for global trade, was being blocked by a container ship that has run aground and is delaying ship movement.
Prices were also boosted by data showing US gasoline demand improved and refinery run rates were picking up.
“As much as those (Suez blockage and US demand) factors were there, it doesn’t really erase the demand concerns questions that were asked earlier this week,” CNBC quoted Commonwealth Bank commodities analyst Vivek Dhar as saying.
“And while the focus was on Europe, we also have rising COVID-19 cases in places like India and Brazil, developing economies which are really critical to the story for sustainable oil demand growth," he added.
Noting that about 10% of global seaborne oil passes through the canal, Gittler had earlier said that the problem should be soon fixed “so I doubt if it will have much lasting impact."
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