Even Though the Suez Canal Is Reopened, It Could STILL Cause Catastrophic Supply Chain Damage

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by Daisy Luther, The Organic Prepper:

As of right now, the Suez Canal blockage seems only to be a human interest story. Some readers watching the story of the grounded sky-scraper-sized Ever Given container ship may find it comical and curious. Surely you’ve seen the many memes circling the internet?

Only a few understand the ramifications if the vessel isn’t dug out and freed very soon. But the Suez Canal blockage could very well become an issue at the checkout counter.

TRUTH LIVES on at https://sgtreport.tv/

UPDATE: The canal has reopened at 10 this morning after being blocked for nearly a week. Hundreds of vessels remain backed up and passage will hopefully resume later today. Due to the massive delays and just-in-time shipping, the facts of the article remain pertinent.

Lloyd’s List has estimated the wait is costing about $9.6 billion per day

Before the Ever Given ship was grounded, approximately 50 vessels a day sailed through the narrow Suez Canal, which amounts to roughly 10% of global trade. These vessels carried everything from electronics to chemicals, ore, petroleum, and food.

With the ship being lodged sideways in the canal, there are virtually no alternative routes for shipping goods from Asia to Europe. Much of that cargo is simply sitting idle. It is either currently waiting to cross the canal or stuck in port. Owners and shippers are left wondering what to do. Do they place bets the channel will reopen soon? Or choose more costly and time-consuming alternatives?

Potential severe ramifications for the supply chain are looming

Because of the lockdowns, restrictions, and shutdowns related to COVID, global supply chains are already reeling.

“This is just one more challenge to the supply chain operations that we’re seeing across the board,” Jonathan Gold, Vice President for supply chain and customs policy with the National Retail Federation, said. “[We are] already seeing congestion and other things impacting the supply chain. This is one more thing that adds to that.”

A prolonged shutdown in Suez will only amplify those troubles. Europe would suffer the most significant blow as it relies mainly on transfers through the canal. But, given the unfortunate globalized economy, the United States will feel the effects as well.

What do companies caught in the congestion have to say?

Jennifer Bisceglie, an expert in global supply chain resilience and founder and CEO of Interos Inc., believes that it’s time for companies to consider “having more disparate [supply hubs] instead of having all our eggs on one cargo ship.”

“These things can’t be looked at discretely,” said Bisceglie. “Last year, you had this big wake-up call of the concentration risks of the physical supply chain from COVID, and then you had this on top of it.”

Maersk told NPR that it was not committing to rerouting any of their ships at this time because it was too early to do so.

The company stated, “while out of our control, we apologize for the inconvenience this incident may cause to your business and for critical shipments.”

“[We] recommend that you reach out to your local sales representative for dialogues and quotations on alternative solutions, such as air and rail for urgent cargo that is still at origin or elsewhere,” it said.

What will this mean for the cost of shipping, operating costs, and oil prices?

Mostly, it will depend on how long the ship remains stuck and how quickly the other ships can catch up on their deliveries.

“[A] few days might not have a meaningful impact,” said John Kartsonas of Breakwave Advisors, a company that specializes in asset management and advisory services for the shipping and commodities industries. But he added that if the situation takes weeks to resolve, it is likely shipping rates will start to climb. More days at sea means ships are burning more fuel. That means operating costs will also start to rise. 

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