How does the Suez Canal Congestion affect the ships carrying freight and supply chains? During a journey through the canal, the Ever-Given container ship was moving through a sandstorm. The rough winds turned the ship sideways and lodged it in the canal. This created a domino effect that has lasted a few days and may continue on for much longer. Although the ship has been successfully released, there may still be an aftereffect.
The Importance of the Suez Canal.
Created over a century ago, the Suez Canal is known as one of the most important passageways for shipping freight globally. After many attempts to connect the Red Sea to the Mediterranean Sea spanning thousands of years, the first successful completion happened in 1869. Freight vessels have been using the canal as a shortcut from Asia to Europe and vice-versa ever since. Today, the canal is used as a convenient shortcut sailing by South Africa. Around 50 ships pass through the Suez Canal on a daily basis.
The Chain Effect of the Trapped Vessel on Supply Chains.
When freight is moved internationally, there can be many components that contribute to the distribution of the freight. When one component is disrupted, it may trickle down to other parts of the supply chain. In the case of the Suez Canal, the Ever Given vessel blockage resulted in over 300 ships being restrained by Sunday. This means that the ships may not make it to their ports in time which means that the freight may not reach the endpoint in time. Which can look unfavorable to the companies distributing the goods.
The Ships that were impacted contained thousands of containers each. Companies like Ikea and Walmart also depend on the Suez Canal when moving their freight. The total monetary cost of this incident is yet to be determined. This may be extensive nonetheless, depending on how much the supply chains are strained.
Now that the Ship is Freed, what is next?
On Monday, the Ever Given ship was released and allowed for the resuming of Vessel activity. But with the delay already creating a large backup, it can take a while to clear. The vessel itself will first be sent to Great Bitter Lake for damage examination. With the canal still backed up, freight forwarders and shippers are looking for other passageways to move their freight. Some carriers are taking a lengthier route and going through the Cape of Good Hope in South Africa Instead.
As of today, the ports that the ships were on their way to have not been affected greatly. This is because the vessels that were blocked by the canal were planned to arrive on a later date. The ports may see an increase in volume in the coming weeks, however, it may be too soon.
A1 Worldwide Logistics
Are you planning on moving freight and need a forwarder to aid you? Feel free to contact us at 305-821-8995 . We also provide customs clearance services to clear your freight when it enters the country.