“Ever-Given” traffic jam caused USD9 billion per day Global trade cost, straining already stretched supply chains due to the Pandemic.
The umbilical cord of trade from Europe to Asia & the south seas has been chocked due to “misadventure” or human error, At least 369 vessels, carrying USD13.73 Billion of trade,everything from crude oil to cattle, are backed up as they wait to traverse the Suez canal. Dozens of others have taken the long, alternate route around the Cape of Good Hope at Africa's southern tip — a 5000km detour that costs ships hundreds of thousands of dollars in fuel and other costs. Egypt, which considers the canal a source of national pride and crucial revenue, already has lost over $95 million in tolls, This crisis cast a spotlight on the vital trade route that carries over 10 per cent of global trade, including 7 per cent of the world's oil. Over 19,000 ships ferrying Chinese-made consumer goods and millions of barrels of oil and liquified natural gas flow through this artery from the Middle East and Asia to Europe and North America.
While the canal is now unblocked, it is unclear when traffic would return to normal. Analysts expect it could take at least another 10 days to clear the backlog on either end.
The breakthrough came after days of immense effort with an elite salvage team from the Netherlands. Tugboats pushed and pulled to budge the behemoth from the shore, their work buoyed by high tide at dawn Monday that resulted in the vessel's partial re-floating. Specialised dredgers dug out the stern and vacuumed sand and mud from beneath the bow.
Alliance Group chief executive David Surveyor says the blockage worsens already disrupted trade logistics due to covid-19 and occurs just as primary sector exports are reaching their peak. “The problems are widespread with bottlenecks across every single link of the supply chain,” Surveyor says. “Container availability, vessel schedule, warehouses and transit times are all impacted and port congestion remains a problem. The impact from the Ever Given worsens the situation,Surveyor says Alliance is successfully shipping product – he describes refrigeration and cool store capacity as satisfactory, and with processing demand for beef at peak levels for the next two months, additional capacity has been freed up at its beef plants.
There is also the increased likelihood that multiple food shocks will happen at the same time, a scenario that has the potential to severely disrupt global trade systems, particularly if major food growing regions are hit.
Food shocks can occur because of political unrest, policy change, and mismanagement, but the biggest factor is extreme weather. As the effects of climate change intensify, extreme weather events like these will likely become more common and more intense, threatening food production around the world. If food shocks continue to increase in occurrence and severity, as a recent study predicts, then we should expect extended disruption along the entire food supply chain, which will affect everyone from big agricultural interests to subsistence farmers—as well as everyone who eats.
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