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Suez Canal could be blocked for weeks by 'beached whale' ship

Yusri Mohamed, Gavin Maguire and Florence Tan
·5-min read

By Yusri Mohamed, Gavin Maguire and Florence Tan

ISMAILIA, Egypt (Reuters) - A huge container ship blocking the Suez Canal like a "beached whale" may take weeks to free, the salvage company said, as officials stopped all ships entering the channel on Thursday in a new setback for global trade.

The 400 metre Ever Given, almost as long as the Empire State Building is high, is blocking transit in both directions through one of the world's busiest shipping channels for oil and refined fuels, grain and other trade linking Asia and Europe.

Late on Thursday, dredgers were still working to remove thousands of tonnes of sand from around the ship's bow.

The Suez Canal Authority (SCA) said earlier that nine tugs were working to move the vessel, which got stuck diagonally across the single-lane southern stretch of the canal on Tuesday morning amid high winds and a dust storm.

"We can't exclude it might take weeks, depending on the situation," Peter Berdowski, CEO of Dutch company Boskalis, one of two rescue teams trying to free the ship, told the Dutch television programme "Nieuwsuur".

A total of 206 large container ships, tankers carrying oil and gas, and bulk vessels hauling grain have backed up at either end of the canal, according to tracking data, creating one of the worst shipping jams seen for years.

The blockage comes on top of the disruption to world trade already caused in the past year by COVID-19, with trade volumes hit by high rates of ship cancellations, shortages of containers and slower handling speeds at ports.

The world's number one line A.P. Moller Maersk said it was considering diverting vessels around Africa's Cape of Good Hope, adding five to six days to the journey between Asia and Europe. It said time-sensitive cargo could be sent on trains and airplanes, although no decisions had yet been made.

"ENORMOUS WEIGHT"

The SCA, which had allowed some vessels to enter the canal in the hope the blockage could be cleared, said it had temporarily suspended all traffic on Thursday. Maersk said in a customer advisory it had seven vessels affected.

Berdowski said the ship's bow and stern had been lifted up against either side of the canal.

"It is like an enormous beached whale. It's an enormous weight on the sand. We might have to work with a combination of reducing the weight by removing containers, oil and water from the ship, tug boats and dredging of sand."

Dredging work to remove 15,000-20,000 cubic metres of sand surrounding the bow continued after dark on Thursday, in coordination with the team from Boskalis subsidiary Smit Salvage, the SCA said.

The dredging work, which began on Wednesday evening and has involved two dredgers, aims to return the ship to a draft of 12-16 metres at which it could be refloated, the authority said.

(Graphic: Suez blockade - https://graphics.reuters.com/EGYPT-SUEZCANAL/SHIP/gjnvworxbvw/Suez-blockade.jpg)

Japanese shipowner Shoei Kisen apologised for the incident and said work on freeing the ship, which was heading to Europe from China, "has been extremely difficult" and it was not clear when the vessel would float again.

Another official with knowledge of the operation said that was likely to take days. "If you end up in the scenario that you have to remove cargo then you are looking at a time consuming exercise," he said, declining to be named.

A higher tide due on Sunday may help the rescue efforts.

However, the Egyptian meteorological authority is also warning of a "disruption of marine navigation" due to an expected sea storm on Saturday and Sunday, with winds forecast to reach up to 80 kph (50 mph) and waves up to 6 metres high along the Red Sea and the Gulf of Suez.

Roughly 30% of the world's shipping container volume transits through the 193 km (120 mile) Suez Canal daily, and about 12% of total global trade of all goods.

"Every port in Western Europe is going to feel this," Leon Willems, a spokesman for Rotterdam Port, Europe's largest, said. "We hope for both companies and consumers that it will be resolved soon."

CONTAINER CRUNCH

Consultancy Wood Mackenzie said the biggest impact was on container shipping, but there were also a total of 16 laden crude and product oil tankers due to sail through the canal and now delayed.

The tankers were carrying 870,000 tonnes of crude and 670,000 tonnes of clean oil products such as gasoline, naphtha and diesel, it said.

Russia and Saudi Arabia are the top two exporters of oil through the canal, while India and China are the main importers, oil analytics firm Vortexa said. Consultancy Kpler said the canal accounted for only 4.4% of total oil flows but a prolonged disruption would complicate flows of Russian and Caspian oil to Asia and oil from the Middle East into Europe.

The impact on oil prices has been limited so far as the destination of most oil tankers is Europe, where demand is currently weaker due to a new round of lockdowns. [O/R]

(Graphic: Top exporters of crude and products via Suez Canal - https://graphics.reuters.com/GLOBAL-OIL/jbyvrabeope/chart.png)

(Graphic: Top importers of crude and products via Suez Canal https://graphics.reuters.com/GLOBAL-OIL/nmovarbyopa/chart.png)

The deputy managing director of Germany's BDI industry association, Holger Loesch, expressed concern, saying earlier shipping holdups were already affecting output, especially in industries depending on raw materials or construction supplies.

About 16% of Germany’s chemicals imports arrive by ship via the Suez canal and the chief economist for the association of German chemicals and pharmaceuticals producers VCI, Henrik Meincke, said they would be affected with every day of blockage.

The owner and insurers face claims totalling millions of dollars even if the ship is refloated quickly, industry sources said on Wednesday. Shoei Kisen said the hull insurer of the group is MS&AD Insurance Group while the liability insurer is UK P&I Club.

(Reporting by Yusri Mohamed in Isamilia, Gavin Maguire and Florence Tan and Roslan Khasawneh in Singapore; additional reporting by Bart Meijer in Amsterdam, Yuka Obayashi and Sakura Murakami in Tokyo, Mark John, Dmitry Zhdannikov, Julia Payne, Carolyn Cohn, Shadia Nasralla and Jonathan Saul in London, Anthony Deutsch in Amsterdam, Michael Hogan in Hamburg and Rene Wagner; Writing by Philippa Fletcher; Editing by Robert Birsel, Aidan Lewis and Alison Williams)