Good news! Egyptian workers cheer as Ever Given floats in Suez Canal

A grounded cargo ship in the Suez Canal is finally moving, bringing a conclusion to a six-day international drama. The Ever Given, a giant container ship blocked the Suez Canal last Tuesday when it became stuck. It caused a backlog of hundreds of ships and snarled global supply lines already under pressure due to the coronavirus pandemic.

In the early morning hours, the Ever Given was successfully partially refloated at about 4:30 a.m. local time in Egypt. By 5:42 a.m. local time, the Egyptian crew of workers trying to free the ship cheered as it finally floated in the canal.

The Ever Given is longer than the canal is wide. It became lodged while navigating the canal during high winds and poor visibility. An investigation is still continuing as to what went wrong as the Ever Given traveled the narrow waterway. The answer is likely as simple as human error, according to the Suez Canal Authority.

Initial reports said the 1,300-foot, 200,000-ton Ever Given got wedged in the shipping channel because of high winds and a sandstorm that affected visibility.

But the head of the Suez Canal Authority now says weather conditions were “not the main reasons” for the ship’s grounding.

“There may have been technical or human errors,” the canal authority’s chairman, Osama Rabie, told reporters Saturday, without giving more details, the BBC reported.

“All of these factors will become apparent in the investigation.”

Blaming wind seems to be a popular excuse for human error lately. When President Biden fell up the stairs to Air Force One – three times – the White House blamed it on the windy weather. Biden is frail but did the wind really cause him to lose his balance and take three spills as he went up the stairway? Color me skeptical.

A reporter described this accidental blockage as “the biggest crisis in Canal since 1956 war.” It certainly disrupted supply chains and provided the potential for shortages in the coming weeks. An estimated 10% of global trade passes through the canal which adds up to $10B of good daily. With no alternative shipping routes for moving goods from Asia to Europe, imports to the U.S. can be delayed. This was a concern since the blockage of the canal was expected to last for much longer than it did. There is a worldwide container shortage due to the pandemic and a rise in consumer demand. The blockage prevented empty shipping containers from being returned to Asia. Delays in parts shipments from Asia to Europe would push back delivery of finished products from Europe to the U.S. Even something as simple as instant coffee was affected.

The vessel blocking passage in one of the world’s most important maritime chokepoints isn’t just curbing shipments of crude oil and liquefied natural gas, but also containers of robusta coffee– the type used in Nescafe. Europe is most affected as it imports through the Suez, but the impact will be felt globally as shipping delays exacerbate a shortage of containers that upended food markets.

“For traders, they are going to scramble to supply their clients in Europe,” said Jan Luhmann, founder of JL Coffee Consulting and a former head coffee buyer at Jacobs Douwe Egberts BV, one of the world’s largest coffee roasters. “Resolving this is going to take a few days if we are lucky, but even so, a lot of damage has already been done.”

The blockage in the Suez Canal also affected supplies of toilet paper and furniture.

Suzano, a Brazilian company that accounts for about a third of global supplies of hardwood pulp, which is used to make toilet paper, told Bloomberg the container crunch already poses the risk of supply snags.

And booming furniture sales amid the pandemic’s work-from-home trend have pushed back deliveries by months, a logjam worsened by congestion at California ports, according to Business Insider. The Suez snarl could intensify the back-ups.

Oil shipments also may become ensnared in the crisis. About 1.9 million barrels of oil a day go through the canal, according to Lloyd’s List, a shipping journal. That’s about 7% of all seaborne oil. The closure could affect shipments of oil and natural gas from the Mideast to Europe and nudge crude and gasoline prices higher. Pump prices already have climbed because of a winter storm that shut down Texas refineries and a switch by refineries to more expensive summer gasoline blends.

So, you can see it wasn’t just Europe and Asia that would experience interruptions in their supply chains, it would also create shortages in the U.S. Last Friday the U.S. Navy offered to help the Egyptians clear the ship. The cost to the global economy was estimated then to be $400M per hour. U.S. Central Command spokesman Captain Bill Urban released a statement.

“We have offered and stand ready to assist Egypt, and will look to support any specific request we receive. We continue to monitor and assess the situation, but have nothing to provide on any potential specific support at this time.”

CNN first reported the Navy’s involvement in the Suez situation.

The White House on Friday also confirmed it has offered Egypt help to remove the ship and get traffic flowing again.

On Sunday, the Pentagon confirmed that the blockage in the Suez Canal affected the movement of U.S. military vessels. This presents a national security angle to the story.

Pentagon officials confirmed on Sunday that the block caused by the Ever Given will affect the movement of U.S. military vessels. However, it added that the Department of Defense has alternative methods of supporting operations in the region.

“We are not going to talk about specific operational impacts,” Rebecca Rebarich, a public affairs officer with the U.S. Naval Forces Central Command, U.S. 5th Fleet told The Hill in a statement. ”

“The Suez Canal is an essential maritime choke point, and the longer passage is suspended, the more impact it will have to civilian and military transits. However, we have alternate capabilities to mitigate impact and support to our operations in U.S. Central Command’s area of responsibility throughout any extended blockage,” Rebarich added.

So it is good news that the ship has been floated and is moving through the Suez Canal. The backlog of ships can begin to be eased and supply chains will have suffered more minimal damage than if the blockage had dragged out longer.

The Ever Given is Japanese-owned, Taiwanese-operated.