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Suez Canal blockage to impact SL supply chain

29 Mar 2021

By Alma Rizvi   Prolonged delays due to the Suez Canal blockage in Egypt can impact the whole supply chain and shipping circles from Asia to Europe, including that of Sri Lanka, Shippers’ Academy of Colombo Chief Executive Officer (CEO) Rohan Masakorala told The Morning Business.  “The shipping industry is being exposed to a medium-term backlog, and this would contribute to the rise of shipping charges,” he stated. With the industry reeling from the blockage in the Suez Canal, shipping rates for oil product tankers have nearly doubled this week, and several vessels were diverted away from the vital waterway, as a giant container ship remained wedged between both banks. Masakorala further emphasised that this particular shipping route is important for world trade and has a direct impact of approximately 30% on global container trade movement and 12% on global trade as a whole. “Clearing the backlog will take some time because there will be cargo accumulating and space issues will come in the short term. The reverse effect will be passed down to the consumers,” he added.  Ever Given, a 20,000 TEU (20-foot equivalent unit) container vessel of the Evergreen line, ran aground across the Suez Canal on 23 March and was earlier expected to be re-floated quickly, perhaps in 24 to 48 hours. Meanwhile, at least 160 ships carrying vital fuel and cargo are waiting to pass through the blocked waterway, according to a senior canal pilot at the Suez Canal Authority (SCA). A team of salvage experts from Dutch firm Smit Salvage and Japanese company Nippon Salvage has been appointed to help move the ship, and the first step would be to remove fuel oil and ballast water from the ship and try to move it at high tide. If that doesn't work, staff will have to remove containers and try to dig or flush away the sand banks in which the ship is now lodged, the SCA official stated, speaking to international media. Masakorala pointed out that this situation could result in cost escalations and delays for manufacturers and exporters, and though some items could be routed by air, which may drive up airfreight rates, global trade depended on ships. Perishable cargo – for instance, fisheries products, food, and vegetables, which are sent on reefer containers – can get affected. The SCA announced that eight tugs have been deployed to help dislodge the vessel and if the ship cannot be re-floated in high tide, cargo and fuel would have to be unloaded, which would take more time.


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