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Traffic Jam Caused by Ship Blocking Suez Canal Could Cost $9.6 Billion Per Day

FILE PHOTO: A container ship which was hit by strong wind and ran aground is pictured in Suez Canal

FILE PHOTO: A container ship which was hit by strong wind and ran aground is pictured in Suez Canal

The ship is holding up goods worth $9.6 billion (£7 billion) each day.

A shipping jam, deemed to be one of the world’s largest, could be resulting in losses worth billions. A skyscraper-sized cargo ship wedged across Egypt’s Suez Canal further imperiled global shipping as at least 150 other vessels needing to pass through the crucial waterway idled waiting for the obstruction to clear, authorities said. The container has choked traffic in both directions along the Suez Canal and created what is being referred to as the world’s largest shipping jam. The 200,000-tonne vessel, named ‘Ever Given’ and operated by Taiwanese company Evergreen Marine ended up lodging sideways sometime in Tuesday after being hit by strong winds. The incident has ended up blocking several ships on either side on one of the most important sea routes.

How did the ship get stuck?

The incident began on Tuesday when strong winds blasted in the region and kicked up sands along the banks. The narrow waterway and the difficulty in navigating due to poor visibility resulted in the crew losing control of the ship which careened sideways into a sandy embankment. Tugs and diggers have so far failed to dislodge a massive container ship stuck in the Suez Canal on Wednesday.

How much loss is involved?

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According to a report by the BBC, the ship is holding up goods worth $9.6 billion (£7 billion) each day that the jam is not cleared up. This amounts to about $400 million each hour. Moreover, it could take weeks to clear up the canal.

A report by Financial Express says that the blockade could result in losses of $9.6 billion each day, estimates by London based Llyod’s List, a shipping news journal, show. Westbound traffic on the canal is worth around $5.1 billion daily and the eastbound traffic is worth $4.5 billion. So far, the ship has been holding up traffic for over 48 hours.

Further delay would add to the supply chain disruption slowing the delivery of cargo to businesses across the UK and Europe. Meanwhile, oil companies are starting to prepare for the worst. There was an uptick in interest from oil companies on Wednesday looking to book tankers with options to avoid the canal while there were several bid for space on the pipelines that allow bypass of the waterway completely. Experts suggest that the disruption comes amid volatile oil prices. There were surge in prices earlier this month due to Saudi production cuts and later there was an increase also due to setbacks in Europe’s coronavirus vaccine program. Therefore, the disruption could result in changing oil prices.