Suez Canal blockage could hit consumer supply chain

By

Sandra Halliday

Published
Mar 26, 2021

The current blockage in the Suez Canal may not be a one-off and may have come at a time when consumers are less active in some respects than they were a couple of years ago. But it's still causing major problems for the consumer supply chain, which is already under considerable stress because of the pandemic. 

No ship as long or as heavily laden as the Ever Given has blocked the canal before. A ship of a similar size blocked the River Elbe in Germany five years ago and was only freed after six days, but some have suggested it could take weeks to free this ship. 

Failure to move it soon could add to shipping costs and these are likely to be passed on to consumers in the form of higher prices, or swallowed by already-pressured retailers.

The ship was heading to Rotterdam from China. Shipping news company Lloyd’s List has calculated that the blockage after the Ever Given got wedged in is costing around $400 million an hour, with the canal’s westbound traffic estimated at around $5.1 billion a day and eastbound traffic at $4.5 billion a day. Hundreds of ships are currently delayed.

For UK non-essential retailers, which are gearing up to reopen from April 12, it's a delay that could be a huge problem.

Trade bodies in multiple countries are working with their carriers to assess the situation, but with billions of dollars of goods stuck on ships that can't go anywhere, there’s very little they can do at present, apart from eventually deciding whether to divert vessels around Africa and add further to the time shipping takes.

The Suez Canal is hugely important to global trade as it can cut around 10 days off the journey from east to west and the same on the way back again. Around 12% of total global trade moves through the canal, and nearly a third of daily container shipping volumes.

Because of the queues that are building up and the limits on daily numbers once the canal is unblocked, it will take time to clear existing queues and it could have a knock-on effect on shipping flows and costs for months ahead.