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Suez Canal Blockade cost $9 Billion Per Day

Suez Canal Blockade cost $9 Billion Per Day

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After almost seven days of being stranded, the Ever Given, the giant cargo ship of more than 400 meters in length that was blocking the Suez Canal, has finally been moved by the Egyptian authorities.

The vessel ended up stuck at the 151st kilometer of the Suez Canal on Tuesday, March 23, due to strong winds that diverted its stern to the eastern end of the Canal, grounding the ship and blocking access from both sides.

More than 12 tugboats took part in the operation and more than 27,000 cubic meters of sand were excavated to undock the Ever Given. The ship was directed to the Bitter Lakes area of the Canal for a technical inspection.

More than 360 vessels are now waiting to transit the Canal again and hundreds more had to be diverted and cross the Cape of Good Hope. The Egyptian authorities confirmed that priority will be given to vessels carrying live cattle, due to food shortage problems.

The Suez Canal carries about 30% of the world’s container ship traffic and is a crucial point for connecting trade between Asia and Europe -some 19,000 ships crossed the Canal last year-. In addition, the value of goods crossing the Canal represents around 12% of maritime trade, so its closure was a major stress on global supply chains.

Suez Canal Blockade cost $9 Billion Per Day
More than 27,000 cubic meters of sand had to be removed in order to disentangle Ever Given. (Image: EFE)

The blockade of the Suez Canal and its costs

According to Lloyd’s List, each day that the Suez Canal was blocked cost international trade approximately $9 billion in goods, representing between 0.2% and 0.4% growth.

One of the main affected was the supply of oil. Nearly 9 % of the global supply transits through this channel. Around 600,000 barrels flow through it, going from the Middle East to Europe and the United States; and another 850,000 barrels pass from north to south, bound for Asia.

Suez Canal Blockade cost $9 Billion Per Day
The blockade of the Suez Canal caused stress in the supply chains of oil, natural gas and automobile parts. (Image: EFE)

More than 50% of the crude oil passing through the canal goes from the Persian Gulf countries to Europe and the United States. Saudi Arabia, Iraq and Iran account for 85 % of the exports moving north.

Car manufacturers were also impacted by the problem, as all imports of car parts from manufacturing in Asia circulate through the canal, which would impose restrictions on car manufacturing, mainly in Europe. Nearly 53% of China’s vehicle imports come from that continent.

The Ever Given misfortune came just a few years after Egypt carried out an extension of the Canal with the intention of increasing traffic, whose investment exceeded $8 billion. Between 2015 and 2020 more than 90,000 ships have crossed through, carrying more than 5.5 billion tons of cargo.

Egypt annually receives more than $5.6 billion thanks to the traffic generated. However, this income was diminished in 2020 due to the reduction of maritime trade as a result of the restrictions imposed to contain the new coronavirus (COVID-19).

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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