Wednesday, March 31, 2021
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what are the economic consequences of stopping traffic?

An excavator facing a titanic ship. The photograph of this unlikely duo, widely disseminated on social networks, can make you smile in the face of the immensity of the challenge that this articulated arm tries to take up. Since its grounding on Tuesday March 23, theEver Given is still blocked across the Suez Canal, preventing the full resumption of maritime traffic in the region.

The sinking of the container ship could have a pharaonic cost. Because by blocking this busy seaway, the 220,000-ton, 400-m-long ship halted the functioning of part of world trade. Explanations.

Dozens of boats at a standstill

The interruption of traffic on the Suez Canal immediately created a traffic jam. According to the naval review Lloyd’s List (in English), more than fifty ships per day use this route daily in normal times. Since Tuesday, the Suez Canal Authority has reopened an older part to divert some ships, but this passage can only accommodate smaller boats.

In the meantime, 46 bulk carriers and dozens of tankers and container ships too large to take this emergency route were immobilized on Friday March 26 at the two entrances to the canal, awaiting a restart of traffic, still according to Lloyd’s List. But this one could be late …

If lthe owner of theEver Given said he was hopeful that the ship would be released on the evening of Saturday, March 27, the company responsible for refloating the container ship instead spoke of its side “several days or even weeks” of works.

Delays in delivery to be expected

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Every day, 5.1 billion dollars of goods pass through the Suez Canal towards Europe (4.3 billion euros), according to the magazine Lloyd’s List. And towards Asia, it is 4.5 billion dollars (3.8 billion euros) of goods which are transported daily. This shows the cost of stopping traffic on this highly strategic seaway.

The delay implied by the blockade led the shipping giant Maersk and the German Hapag-Lloyd has considered diverting its ships to pass through the Cape of Good Hope. Or a detour of 9,000 kilometers, which would extend delivery times by ten days. At least four tankers are considering doing the same. But such a change of trajectory would have a significant fuel cost.

“It may be that we receive things a little later than expected and that European exports lag a bit”, Explain Paul Tourret, Director of the Higher Institute of Maritime Economy, to franceinfo. Car “lhe Suez Canal brings everything made in China “, he specifies.

Towards an increase in the price of oil?

News of the lockdown caused oil prices to jump up to 6% on Wednesday, before falling back on Thursday. Normally, dThousands of barrels of oil, mostly from the Middle East, travel through the Suez Canal every day. The traffic represents “around 10%” of European oil imports, estimates Paul Tourret, interviewed by France 3 this time.

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If it lasts, the blockage could even have an impact on the price of fuel in France and Europe. “When it lacks a little fluidity [dans le transport] black gold, it has repercussions on the prices at the pump “, explains the specialist. For the moment, however, no increase has been noted in the price of gasoline and diesel.

An impact in multiple areas

Almost 10% of international maritime trade passes through the Suez Canal. Like oil, the prices of various products could therefore increase if the situation were to persist: “There may be shortages”, warns the geopolitologist Christian Bouchet, director of the Center d’études de la mer at the Catholic Institute of Paris, with France 3.

Sea freight rates could also skyrocket after this accident because the number of available carriers could be reduced in the coming weeks, warns the magazine Lloyd’s list. In addition, the blockage will weigh on the Egyptian economy: the Suez Canal brought the country more than $ 5 billion in 2020.

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