The Suez Canal blockage one month on. What are the lessons to be learned?

The infamous cargo ship, the Ever Given, made headlines last month, as it became lodged in banks of the Suez Canal, causing a $9 billion per day blockage. In 2020, more than 50 ships on average per day passed through the 120-mile-long waterway, accounting for an approximate 12% of global trade. That’s a pretty big number. One month on, the canal may be free, but the chaos continues to dredge on; from the backlog of ships to the dramatic arrest of the Ever Given. We dive into the latest on the happenings of the Suez Canal and what the key learnings of this industry-shaking event have been.

The world’s greatest shortcut

The Suez Canal; the most vital passage for ocean freight movements. Nestled between both African and Asian continents, the essential waterway connects the Mediterranean and Red seas, saving ships on the Asia-Europe route a 12-day 6,000-mile circumnavigation around Africa – a nearly two week voyage simply cut into a 12-hour transit. Think it’s safe to give it the title of the world’s greatest shortcut?!  

A sticky situation

While several theories have been raised as to how the giant ship became lodged, the main ideas remain around a tumultuous combination of high winds and human error. Sandstorms and powerful gusts seem to have directed the vessel off course, lowering visibility and leaving the pilots to determine an immediate exit strategy.  

Wind gusts were reported to be blowing at speeds of 46 miles per hour; posing a huge threat to the Ever Given. Should a crosswind at that strength strike the Ever Given, the 18,300 shipping containers onboard stacked high would have acted as an enormous sail, causing a risk of drifting, so we can expect the pilots attempted to counteract these winds by increasing speed at an angled course against the wind.  

But it’s no secret; ships the size of the Ever Given don’t mix well with shore banks - enter the bank effect. When a vessel of this magnitude sails even just a little too close to the shore, the water between the ship and land is squeezed and displaced, resulting in water flow speeding up, pressure dropping and downward sucking pressure.  

“This phenomenon, known as the bank effect, can wreak havoc on megaships, which displace large quantities of water and cannot correct course quickly if knocked off kilter.”

- Popular Mechanics

When the stern of the Ever Given suddenly swung towards the west bank of the Suez Canal, it was clear that the ship had started to bank, pushing the bow to the east and resulting in the infamous week-long stranding.

The tugboat saviours

After a grueling endeavour to release the ship from the banks, fleets of tugboats, dredgers and salvage crews worked to refloat the ship. Tugboats worked tireless to pull the stern from the west bank, managing to release it on the 29th March and partially refloating the Ever Given. Then a combination of excavators helped remove the soil from the canal’s bank to help free the bow of the ship, whilst tugboats pulled and pushed alongside to help guide the ship out of the sandy banks, finally releasing the giant vessel 6 days after its initial shoring.

Where is the Ever Given now?  

Following its release, the Ever Given was eased over to Great Bitter Lake for inspection. Whilst the vessel is freed from the shores, it is not free to continue its journey.  

On the 13th of April, the Ever Given was officially placed under arrest by the Court in Egypt with the Suez Canal Authority SCA making a claim against the shipowners for the sum of US$ 916 million on 7th April 2021, to cover losses during Ever Given’s grounding in the Suez Canal. The amount includes a US$ 300 million claim for salvage bonus and a US$ 300 million claim for loss of reputation and so on.  

“The vessel will remain here until investigations are complete and compensation is paid,” Osama Rabie, chairman of the Suez Canal Authority, told state television in Egypt on Thursday.  

“During the meeting between the shipowners and SCA on April 12, 2021, no consensus was reached as SCA’s claims are largely unsupported and lack any detailed justification. In order to lift the arrest order as soon as possible, Evergreen is urging all concerned parties to facilitate a settlement agreement to be reached."  

- Evergreen official statement

There is no clear idea when the Ever Given will be able to continue its course or when cargo owners will be able to recover their goods. On the 1st April, the Ever Given’s shipowner, Shoei Kisen declared ‘general average’ - a legal principle of maritime law and requires that all cargo owners on a vessel contribute to the costs of any loss, even if their cargo is not damaged. This could potentially be the most complex general average claim of all time and associated parties must prepare themselves for a complicated and lengthy process to get their freight released.

The impact of the blockage

So, what does the aftermath of a week-long blockage to the most crucial cargo route look like? Let's start with the fact this isn’t just any vessel getting stuck, it’s one of the largest cargo ships involved in facilitating global trade. Per day, 15 million barrels of oil and 3.3 million tonnes of cargo travel through the canal, so you can only imagine the knock-on effects that are bound to happen from a week-long blockage.  

Even once the obstructing ship was cleared, it wasn’t smooth sailing after that. Egyptian port workers had to scramble to funnel hundreds of delayed vessels through one of the world’s busiest waterways. Ships that had been stuck in the traffic jam are starting to arrive at ports across the world, leaving global ports rushing to catch up on the backlog; the surge in traffic only adding to the existing pressures posed by the Coronavirus pandemic.  

Just over a year ago, global trade was devastated when essential ports and factories began to shut down in response to the pandemic, with Rotterdam seeing a fall in traffic from China down by 20%. The shipping industry had to cope with a huge fall in demand, driving container pricing higher than ever and many containers having to be stored in inland depots or piled in cargo ports. However, once trade started to pick back up, shipping container shortage then became its own crisis. The halt of economic movements and production caused a huge break on import and export – meaning many containers were sitting in storage empty and these empty containers were not being picked up.

What lessons can we learn from this event?

Supply chain pressures are at an all-time high. With all the curveballs thrown in the last year, it forces us to examine our existing processes and figure out what lessons can we take away?  

At Unsworth, we’ve been driving the use of our technology platform towards our clients since we launched in 2019, but this event shows just how valuable these innovative platforms can really be. Shipment visibility started off as a convenience piece. We’ll eliminate the unknown and avoid the back and forth of ‘where is my shipment?’ emails but the Suez Canal incident shows us just how vital visibility really is to a supply chain.  

It’s more than just end-to-end tracking. Having real-time disruption alerts to gives your teams a chance to minimise the severity of unanticipated events; efficiency measures will help improve overall planning and streamlining processes; access hundreds of data points to gain the insights you need to make decisions quickly, focusing valuable time and energy where it’s needed.

Whilst digital platforms can never predict an event quite like the Suez Canal, the past year has taught us that a fully digitised supply chain is always going to be far more resilient, no matter what.