Lessons Of Democracy: Obstruction of the Suez Canal

Wednesday, March 31, 2021

Obstruction of the Suez Canal

On Tuesday, March 23, the Suez canal obstruction began after a 200,000-ton ship was grounded due to a mixture of a sand storm with strong winds and human/technical error. The Suez Canal, which links the Mediterranean and the red sea, had been blocked for about 6 days. On Monday, March 29, the canal finally was unblocked as tug boats were able to maneuver the grounded ship, “Ever Given”, away from the land.

Due to this obstruction, some countries such as South East Asia and India had to detour all the way around Africa if they were trying to get to the western hemisphere. For some other ships, it caused a growing backup of up to 400 ships. This put a high risk on the cargo on the ships since there was some livestock aboard. The Ever Given was owned by a Japanese firm but operated by a Taiwanese shipper. However, this blockage will cause several months of disruption for the global supply chain since 80-90 ships pass through this canal a day, and around 10 billion dollars of trade pass through each day. More specifically, “about 12% of global trade, around one million barrels of oil and roughly 8% of liquefied natural gas pass through the canal each day”(bbc.com). The prices of oils and other commodities have already increased due to this issue. Not only is the global shipping industry and the Egyptian economy affected by the blockage but it trickles down to the smaller business and industries too as there was a delay to receiving products. If the blockage continued to last some firms would have no choice but to order their products by air freight which is 3 times more expensive (bbc.com). The blockage is adding to the already existing problems of trade during the covid era, considering the difficulties of production and trade due to the desire to contain the virus.

Following the unblocking of the canal, more problems might arise, such as more congestion since many ships are waiting to take their normal sailing route. The majority of this issue will fall on individual consumers who have to pay for the rising prices of goods. This could generate more problems since some face financial struggles from covid. Some operations and regulations of the Suez canal are likely to change since over the years shipping vessels have been getting bigger and bigger.