Washington: On Monday afternoon in Egypt, the tide turned. An armada of tugboats, dredgers and salvage crews had toiled for days to move the Ever Given - a massive container ship that managed to get stuck between the Suez Canal’s banks March 23 - out of its rut. At last, it came free and lurched north toward the Bitter Lakes, where authorities could inspect the skyscraper-sized vessel without snarling maritime traffic.
The mishap had led to the ship choking off the Suez Canal, a man-made strait that sees more than a tenth of all global shipping pass through every year, for almost a week. While it provided no end of memes and mirth on social media, the blockage cost an estimated $9.6 billion in daily delays and served as a reminder of the extent to which the global economy still moves on sea - that is, roughly of 70 per cent of all international trade.
Supply chain impact
It also could take close to another week to unsnarl the traffic jam of hundreds of other ships and tankers waiting to make the same passage. The supply chain impacts of these disruptions may play out over many months to come. Today’s WorldView considers other lessons from this latest Suez crisis.
It’s a global story. Egyptian President Abdel-Fattah AL Sissi hailed the freeing of the vessel as a national success for his countrymen.
Yet the dramatis personnae of the whole episode represented a veritable floating - or in this instance, perhaps, “re-floating” - United Nations. Consider the mammoth container ship itself: The MV Ever Given was owned by a company in Japan, operated by a container shipping firm based in Taiwan, managed by a German company and registered in Panama.
The ship was conveying goods from Asia to Europe, specifically the Dutch port of Rotterdam. It ran aground amid a Middle Eastern sandstorm and was rescued by a multinational coalition that included Japanese and Dutch salvage teams and local Egyptian tugboat operators.
Lastly, the ship’s 25 crew members were all Indian nationals, part of a legion of close to 2 million seafarers - many from impoverished backgrounds in South and Southeast Asia - who keep international trade moving. Thanks to coronavirus-era border restrictions, hundreds of thousands of sailors have languished aboard their often cramped ships beyond the terms of their contracts, invisible workers in what one captain described to the Financial Times as the “shadow sector” of the global economy.
The ship’s ordeal also highlighted the fragility of the global economy. A century and a half ago, the opening of the Suez Canal heralded an era of global fast shipping that has accelerated in the decades since. Over the past half-century, meanwhile, capacity on cargo ships has mushroomed by about 1,500 per cent, expanding the range of available consumer goods and lowering prices around the world, as Peter Goodman of The New York Times observed.
But those increases in size are now creating bottlenecks in highly-trafficked arteries including the Suez Canal. “The ships today are bigger than they used to be,” a pilot working for the Suez Canal Authority said, adding that navigating vessels such as the Ever Given through the canal was becoming more taxing. “This is something new. We haven’t seen this before.”
The vulnerabilities of an interdependent world, where one product may be produced and delivered through supply chains threading multiple continents, are also on show. “For global trade, already reeling under soaring freight rates, equipment shortages and space crunch on ships in the wake of disruptions triggered by the pandemic, the grounding of the ‘Ever Given’ could not have come at a worse time,” wrote journalist P Manoj in the Hindu, an Indian newspaper. “The disruptions from the closure of the Canal could last for months and port congestion, equipment shortages and capacity shortages on ships are set to intensify.”
“Even shipments that don’t go through Suez will be affected, as factories wait on essential components arriving from elsewhere before they can make products to send off,” wrote former merchant mariner Salvatore Mercogliano for The Post’s Outlook section. “Gas and oil prices will spike.”
Diversifying strategic sea routes
he incident also revived talk of alternate routes - from the old, but far longer and more costly journey around the southern tip of Africa to the promise of a northern passage in the Arctic as melting ice at the roof of the world opens new pathways. “The incident in the Suez Canal should make everyone think about diversifying strategic sea routes amid the increasing scope of sea shipping,” Nikolai Korchunov, Russia’s envoy for international cooperation in the Arctic, said Friday.
A world of chokepoints. The blockage of the Suez Canal offered a potent reminder of how important a handful of key maritime passages is to the whole global economy, as well as the strategic calculations of regional powers. A crisis there, or the Panama Canal, or the Strait of Malacca, or the Strait of Hormuz would roil global markets and - depending on the context - trigger potential standoffs between rival navies.
Some analysts saw on the relative farce of the Ever Given’s foundering a glimpse of thornier crises to come. China is dependent on vast imports of oil and iron ore and has arguably structured the bulk of its foreign policy - including its ambitious Belt and Road Initiative - to secure its far-flung trade networks.
“Unlike the US, which is a net exporter of crude these days, China imports nearly three-quarters of the oil it consumes, as well as about four-fifths of the iron ore it uses to fuel its frantic pace of infrastructure buildout - not to mention most of the goods exports it uses to obtain hard currency to pay for these commodities,” David Fickling and Anjani Trivedi of Bloomberg Opinion wrote.
They added: “That makes it peculiarly vulnerable to maritime blockades. The geography of east Asia means that the straits of Malacca and Singapore, plus the quasi-straits that run through the navigable stretches of the South China Sea and those separating Taiwan from the Philippines, Japan’s Okinawa islands and the Chinese mainland, are all highly vulnerable to interdictions in the event of conflict.”
In other words, chokepoints like the Suez Canal are bound to be even greater sites of geopolitical rivalry and tension. All the more reason, argued James Stavridis, a retired US admiral and former supreme allied commander at NATO, for world powers to figure out a collective system for administering them.