Team IV

Seuz Canal

Discuss the impact of Suez Canal blockage due to Evergreen cargo ship. Briefly talk about the

strategy that the firms affected by the blockade could have implemented to minimize the effect

of the blockage.

1. Overview
The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to
the Red Sea through the Isthmus of Suez and dividing Africa and Asia. The canal is a route of
trade between Europe and Asia.
The canal extends from the northern terminus of Port Said to the southern terminus of Port
Tewfik at the city of Suez. Its length is 193.30 km (120.11 mi) including its northern and southern
access-channels. In 2020, more than 18,500 vessels traversed the canal (an average of 51.5 per
day).

A cargo ship called the Ever Given became stuck in the Suez Canal, the body of water that
creates a shortcut between Europe and Asia, on March 23 not long after entering the Suez Canal
from the Red Sea, the side closer to Asian ports. The massive boat has made the canal
impassable and has been difficult to get moving again. The problem is that the Suez Canal is one
of the most vital waterways for shipping in the world. So the blockage has an impact on trade
and economies across the world.

2. Findings

The six-day blockage of the Suez Canal by the mega containership, EVER GIVEN, has created
ongoing supply chain crisis that has already left global shippers and brands fighting price
increases and a shortage of goods, following the onset of the pandemic. Since the blockage
started in the early hours of March 23, numerous vessels that were sailing on the Suez Canal
route were suddenly halted. With every passing minute, the losses mounted, as the scheduled
delivery of the shipments were getting delayed. The BBC News reported the number to
be $6.7m per minute! Carriers had to make the difficult choice – either to wait & watch or
reroute their ships via the southernmost tip of Africa – the Cape of Good Hope.
2.1 Economic Impact
Though the EVER GIVEN was successfully refloated in the early hours of March 29, the actual
knock-on impacts to the supply chain and the greater economy are yet to be seen. Severe port
congestion is also expected as the delayed vessels start arriving at the ports of discharge along
with the vessels that are arriving for their scheduled delivery.
The global shipping industry was already facing a supply chain bottleneck with container
shortages. This incident has increased this shortage by delaying the movement of empty
containers to Asia, where the current demand is among the highest. Low supply combined with
higher demand due to the pandemic-related lockdowns has only aggravated the container
shortage within the shipping industry. Due to the blocked Suez Canal incident, there is a further
expected delay of 1-2 weeks for empty containers to arrive in Asia. This delay may take up to 2-3
months to return to normal.