Blockage in the Suez Canal
29/03 Update: The Ever Given has now reportedly been refloated and should soon be able to resume her journey. She is scheduled to call in the UK later next week.
The British Ports Association is available to provide information and commentary on the potential impact of the continuing blockage in the Suez Canal.
50+ ships transit the canal each day, a key shortcut between east and west. 12% of global trade passes through it, including regular services to and from the far east and the UK, including the Ever Given which was scheduled to call in the UK.
What goods pass through the Suez Canal on their way to the UK?
Containers and bulk commodities, mostly. Containers tend to carry finished products and consumer goods – from trainers to TVs as well as components for businesses and manufacturers. Bulk commodities include oil and gas – which make up around 40% of UK port throughput. Whilst oil prices have risen, we do not foresee a longer-term or significant impact on consumers or markets for the time being. Our 100 members account for 86% of UK port tonnage. The Ever Given was scheduled to call in the UK.
It is unlikely that there are going to be significant amounts of perishable goods held up, given the usual length of the journeys. Food, perishable items and other ‘just-in-time’ cargo is more commonly associated with supply routes through northern Europe and ‘roll on roll off’ ferry services, although if there is a prolonged blockage then supply chains may be disrupted.
Will this affect existing global container congestion?
It depends on how long the canal is blocked but it seems likely that there will be a glut of containers arriving in the UK once the blockage is cleared. This may create some short-term pressure on European and UK container ports, which will likely experience a spike in volumes handled. Container ports are already dealing with volatility and congestion – see our page on this for more details.
What are the alternative options?
Shipping lines are already starting to go ‘the long way around’ – transiting around Africa and the Cape of Good Hope, which can add approximately 8 days to journey times.
What is the likely impact on the UK?
Rerouting around Africa will raise costs for shipping lines and their customers at a time when there is already upward pressure on these costs due to the pandemic. Avoiding the Suez Canal could introduce additional issues for shipping lines that would usually call at Mediterranean ports on their way to northern Europe and the UK. This might mean additional services might be needed – branching off at the Strait of Gibraltar. Either way, the additional fuel costs could mean that ‘freight rates’ – the cost of moving cargo from one place to another – could go up. Freight rates are already higher than usual given ongoing congestion at many container ports around the world as a result of the pandemic. If these additional costs are sustained it’s likely that they will to be passed along the supply chain and eventually to consumers. Oil prices have also began to rise as tankers face these same additional obstacles although we do not foresee any immediate issues with the UK’s energy supply.
Many UK container ports and terminals have been experiencing varying levels of congestion for months. If the Ever Given remains stuck, it is likely that there may be a drop-off in containers arriving for a week followed by a glut, which could cause congestion in European and UK ports. There may be an additional spike in arrivals once the blockages is removed and vessels can transit the canal again. We would expect any disruption to be temporary.
See our page on the global container congestion affecting UK ports here: https://www.britishports.org.uk/global-congestion
Key Facts on the Suez Canal:
- 12% of world trade passes through the Suez Canal at an average of 51.5 ships per day (19,000 ships a year)
- Every week $5.5bn of trade is carried via the Canal
- The Canal is 193km long, 205m wide and 24m deep. It takes approximately 9-12 hours to transit from one end to the other
- The Canal is 150 years and has rarely been closed. The last time the Suez Canal was closed was in 2017 when a Japanese container vessel ran aground following mechanical issues. However, the ship was refloated within hours.
- Half of all vessels that through the Canal are container ships, a quarter are tankers, and the rest are LNG and LPG carriers
- 1.9m barrels of crude oil transit the Canal every day
More information, interviews and comment
If you would like more information or have an interview request, please contact Mark Simmonds, Director of Policy & External Affairs.
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Photo: Contains modified Copernicus Sentinel data 2021, CC BY 2.0, via Wikimedia Commons