Congestion Affects Oil Prices, How Important is the Suez Canal for Global Shipping? The all page

KAIRO, KOMPAS.com – A number of shipsclosed cargo king-sized had jammed on Suez Canal, Egypt until Wednesday (24/3/2021).

The congestion of the container ships on the Suez Canal was triggered by a container ship which got stuck after being pushed by a strong gust of wind.

Reported Kompas.com previously, the container ship caught was named Ever Given.

Ever Given weighs 220,000 tons and is 400 meters long. This container ship got stuck near the southern end of the canal on Tuesday (23/3/2021).

Also read: The Suez Canal is still jammed, many container ships are trapped, this is the impact going forward

Efforts continued until Wednesday (24/3/2021) to re-float Ever Given as reported Reuters.

The congestion is predicted to hamper maritime trade over the next few days.

If more than 24 hours the Ever Given ship has not been successfully evacuated, then inevitably the shipping route will be diverted around Africa.

Also read: Jams Suez Canal, Large Container Ship Clogs International Trade Routes

Why is the Suez Canal important?

Since its inauguration in 1896, the Suez Canal has been widened several times in modernization to accommodate more ships.

The Suez Canal is responsible for 10 percent of global maritime trade. Since it was inaugurated, this canal has shortened the voyage between Asia and Europe.

Before the Suez Canal, shipping routes from Asia to Europe usually circled Africa. This takes a very long time because of the very long distance.

However, since the Suez Canal existed, shipping from Asia to Europe or vice versa could be cut and shorten shipping time to two weeks faster than having to circle Africa.

Also read: [Cerita Dunia] The Suez Crisis and the Weakening of Old Colonialist Powers

Sea Transportation Specialist at Boston Consulting Group Camille Egloff said the Suez Canal is a very important route because all traffic coming from Asia passes through the canal.

“If it doesn’t go through the canal, the ship has to go through Cape of Good Hope on the southern tip of Africa, “said Egloff.

In 2015, the Suez Canal was widened again to allow very large cargo ships like Ever Given to pass through the canal.

Currently, about 50 ships pass through the Suez Canal a day. In the future, the Suez Canal will be widened again and it is targeted that by 2023 the canal will be able to pass 100 ships per day.

Also read: History of the Suez Canal

Impact on supply

Although maritime traffic is slowing down due to congestion on the Suez Canal, there is likely to be little risk of goods shortages.

“There are still stocks (goods) available. If you look at the supply oil, the Suez Canal incident only disrupted oil supplies from the Middle East. We (Europe) have other sources of supply, “said Egloff.

Meanwhile, Head of Market Research Oil at Rystad Energy Bjornar Tonhaugen said that congestion on the Suez Canal is less likely to increase the price of goods.

“But if the congestion lasts more than a few days, it could have an impact on prices,” said Tonhaugen.

Also read: Today in History: Construction of the Suez Canal Begins

Ranjith Raja, Head of MENA Oil & Shipping at Refinitiv, said he had never seen such an incident happen before.

“It is likely that the resulting congestion will take several days to resolve as it is expected to impact convoys, schedules and other global markets,” Raja said.

He noted that oil prices spiked on Wednesday as a number of ships remained stuck in the Suez Canal.

Also read: Over 140 Years Old, Here Are 6 Interesting Suez Canal Facts

.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.