Suez Canal blocking could hike freight fees between China and Europe if not cleared soon: analyst
Cargo Ship Ever Given, photo: VCG
Passage through the Suez Canal, one of the world’s busiest shipping arteries, has remained blocked after a large container ship ran aground on Tuesday. The incident could impact the smooth flow of freight between China and Europe and shore up the already high fees if it could not be solved in a timely manner, an analyst told the Global Times.
The container ship stranded in the Suez Canal for more than a day has been partially refloated and traffic is expected to resume soon, port agent GAC said on Wednesday. The incident already created long bottleneck on the waterway stopping dozens of other vessels from passing, according to a BBC report.
Tug boats and diggers are working to refloat the stranded ship. There are different opinions about the reopening of the canal, from a few hours to a month. Wu Minghua, an independent shipping industry analyst from Shanghai, told the Global Times on Wednesday that it depends on how stuck it got. “Being stranded is not an unusual thing, and I think the Suez Canal Authority has accumulated rich experience on dealing with such situations,” said Wu.
He mentioned several previous cases that could take as long as a week or 10 days to clear incidents. “If the Suez Canal cannot resume smooth cargo flow in two or three weeks, it will eventually push up freight fees, which have already remained at a high level since the second half of last year during the pandemic,” Wu said. The Ever Given container ship, registered in Panama, was bound for Rotterdam from China and was passing through the canal on its way to the Mediterranean, according to shipping data.
The 200,000-ton vessel was operated by Taiwan’s freight company Evergreen Marine. Departing on February 22 from Kaohsiung port of China’s Taiwan island, the vessel also stopped at Qingdao, in East China’s Shandong Province, Ningbo, in East China’s Zhejiang Province and Shanghai. It was scheduled to arrive in Rotterdam on April 1.
Owners of the cargo, mainly goods from China, are paying close attention to the incident to avoid further losses, an industry insider who asked to remain anonymous told the Global Times. Over 60 percent of Chinese goods including new renewable energy products, like photovoltaic modules and other equipment, are shipped to Europe via the Suez Canal. The incident will negatively impact Chinese exporters in the short term as scheduled freight traffic with Europe will be delayed, the insider said.
Chinese ships account for one tenth of the annual traffic volume of the Suez Canal each year.
According to data from the Suez Canal Authority, nearly 19,000 ships passed through the canal in 2020, an average of 51.5 ships per day.
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