VIDEO: Suez Canal blockade hits global exports, traders seek solution

Global trade has been hit hard after a container ship got stuck in the Suez Canal, the waterway that connects Europe and Asia. The 400 metre (430 yard) long Ever Given became wedged diagonally across a southern section of the canal amid high winds early on Tuesday, blocking one of the world’s busiest waterways. Exporters’ bodies all over the world are trying to identify cargo for priority movement to temporarily solve the blocking of one of the world’s busiest waterways.

Egypt's President Abdel Fattah Al-Sisi has ordered preparations for the possible removal of some of the ship's 18,300 containers, SCA Chairman Osama Rabie told Egypt's Extra News.

At least 369 vessels are waiting to transit the canal, Rabie said, including dozens of container ships, bulk carriers, oil tankers and liquefied natural gas (LNG) or liquefied petroleum gas (LPG) vessels.

As efforts are underway to free a giant container ship stuck in the Suez Canal, the Indian government in discussion with the stakeholders has decided that the Federation of Indian Export Organisations (FIEO), Marine Products Export Development Authority (MPEDA) and Agricultural and Processed Food Products Export Development Authority (APEDA) will jointly identify cargo, particularly perishable cargo, for priority movement.

The government has come up with a four-point plan to deal with the situation arising from the blockage of Suez Canal. The plan was chalked out in a meeting convened by the Logistics Division, Department of Commerce, Government of India on Friday.

The meeting in New Delhi was chaired by Pawan Agarwal, Special Secretary (Logistics) and attended by the Ministry of Ports, Shipping and Waterways, ADG Shipping, Container Shipping Lines Association (CSLA) and Federation of Indian Export Organisations (FIEO).

Apart from the prioritisation of cargo, the plan outlined that shipping lines have been advised through CSLA to explore the option of re-routing of ships via the Cape of Good Hope. It was pointed that such re-routing usually takes 15 additional days’ time.

CSLA assured that the freight rates as per existing contracts will be honoured. A request has been made to the shipping lines to maintain stability in freight rates during the period of this crisis. It was noted that the situation is temporary and is unlikely to have a long-lasting impact, said an official statement.

“Once the blockage is over, it is expected that some bunching may take place, especially at the ports of JNPT, Mundra and Hazira. Ministry of Ports, Shipping and waterway assured to issue an advisory to these ports so as to gear up arrangements and ensure efficient handling during the forthcoming busy period,” it said.

The Commerce Ministry statement noted that the blockage of Suez Canal since March 23 is seriously hitting the global trade.

This route is used for Indian exports or imports worth $ 200 billion to and from North America, South America and Europe. It includes petroleum goods, organic chemicals, iron & steel, automobile, machinery, textiles and carpets, handicrafts including furniture, leather goods among others.

It was noted in the meeting that over 200 vessels are waiting on the North and South sides of the Suez Canal and about 60 vessels are getting added to the queue on a daily basis.

If two more days are taken before the efforts result in clearance of the canal (digging on both sides, extra barges being added on every high tide and tugboats to straighten the stuck vessel), the total backlog created would be about 350 vessels. It is estimated that this backlog should take about a week’s time to clear out. It was decided in the meeting to closely monitor the situation, it said.

The Suez Canal Authority (SCA) said on Sunday that tugging and dredging operations to free a grounded container ship blocking the waterway would continue according to wind conditions and tides.

Dredgers working to dislodge the stranded ship have so far shifted 27,000 cubic metres of sand around the ship to reach a depth of 18 metres, the authority said in a statement.

SCA Chairman Osama Rabie told local TV that water had started running underneath the ship. “We expect that at any time the ship could slide and move from the spot it is in,” he told a press conference.

About 15% of world shipping traffic transits the canal and hundreds of vessels are waiting to pass once the blockage has been cleared.

Rabie said he hoped it would not be necessary to remove some of the 18,300 containers on board to lighten the ship’s load, but strong tides and winds were complicating efforts to free it.

“The ship’s stern began on Friday to move towards Suez, and that was a positive sign until 11 p.m. at night, but the tide fell significantly and we stopped,” Rabie told journalists in Suez.

A shipping agent in Port Said said the SCA had notified agencies to prepare for the possible entry of new ships into the canal, while a shipping source said the SCA had outlined a plan for the rapid transit of 133 vessels once the Ever Given was freed.

If the blockage drags on, shippers may decide to reroute their cargoes around the Cape of Good Hope, adding about two weeks to journeys and extra fuel costs. Rabie said the ships that are waiting were free to reroute, but none had yet done so.