A 20,000 TEU containership has run aground in the Suez Canal blocking passage for ships in both directions.
The vessel in question has been identified as Ever Given, chartered by Taiwanese shipping company Evergreen Marine Corporation.
The Panama-flagged vessel suffered a blackout while transiting in a northerly direction, according to GAC Egypt.
“The 199,489 GT ship was fifth in the northbound convoy. None of the vessels before it were affected, but the 15 behind it were detained at anchorages waiting for the canal to be cleared,” GAC said.
Ever Given was underway from China and heading to Rotterdam, deployed on the company’s Far East-Europe service route..
“This accident occurred on March 23, at 6 nautical miles from the southern entry of the canal as the container ship proceeded northbound through the waterway from the Red Sea,” Evergreen said in a statement emailed to Offshore Energy-Green Marine.
As informed, gusting winds of 30 knots caused the container ship to deviate from its course, which is believed to have led to the grounding.
“Evergreen has urged the shipowner to investigate the cause of this accident, and work closely with Suez Canal Authority and related agencies to refloat the stranded ship as soon as possible.”
Ever Given is 400 meters long and 59 meters wide, featuring a total tonnage of 224,000 tons. The boxship, built in 2018, is said to be stuck sideways in a narrow point of the waterway and it is too long to allow other ships to squeeze through, resulting in the likely build-up of vessels on both sides.
The Suez Canal Authority confirmed the incident saying that the likely cause of the grounding was the lack of visibility resulting from the bad weather conditions as a dust storm was passing through the country.
Eight tugboats have been sent to the scene to assist the stranded containership to refloat and resume navigation.
Based on the latest update from the Suez Canal Authority, the grounded vessel has been partially refloated and is now alongside the canal bank. Convoys and traffic are expected to resume as soon as the vessel is towed to another position.
Impact of the blockade already being measured
Being a major trade hub, estimates of the Suez Canal blockage on various types of cargoes are already emerging. Trade flows are expected to be delayed for days as efforts are being undertaken to refloat Ever Given and enable other ships to pass.
Commenting on the potential impact of the incident on the container trade, Lars Jensen, CEO of SeaIntelligence, said that the current expectation is that it will take some 2 days to clear the canal which will cause a delay of 110,000 TEU of cargo.
This is under the assumption that around 55,000 TEU of cargo from Asia to Europe passes through the canal daily.
The delay will cause a spike of cargo into the main ports in Europe as this will now arrive at the same time as cargo arriving normally a few days later, Jensen explained.
“In other words, this increases the risk we will see port congestion in European ports one week from now,” he added.
“On top of that, it simultaneously delays the movement of 55,000 TEU of containers back to Asia per day – further adding delays to getting empty containers available in Asia.”
Having in mind that the Asia-Europe supply chain is already stretched to the limit and that shipping lines have basically employed all available capacity on the market to meet the growing demand, the timing of the blockage is very challenging for the market.
An alternative to the canal is rerouting ships to the Cape of Good Hope, which extends the voyages from Asia to Europe for another week. However, liner majors would have to speed up their ships and would be faced with higher bunker bills.
World’s largest container shipping company Maersk said that it has four vessels in the canal system:
1) Maersk Denver – MECL Service – Next port Algeciras and then North America
2) Maersk Esmeraldas – AE1 – Next port Salalah, then Vung Tau
3) Maersk Saigon – TP11 – Next port Tanjung Pelepas, then Laem Chabang
4) Gunde Maersk – TP12 – Next port Salalah, then Colombo
“Maersk Saigon has the ability to cover a little over two days of delay for on time arrival Asia whereas the other three vessels will face immediate additional delays,” James Wroe, Head of Liner Operations, Asia Pacific, said in a comment.
“Every hour that passes, the backlog at the canal increases placing further stresses on supply lines that were already deprived of buffers.
“Latest news reports indicate that an external salvage team is now due to be appointed so we are watching that closely and in regular contact with the Suez Canal Authority through our South Europe team.”
According to Platts, dirty and clean tankers are also expected to be impacted by the blockage, with Aframax availability in the Mediterranean region set to be adversely affected.
Platts estimates that a total of 42 vessels are waiting now to enter the Suez Canal.
20,000 TEU+ behemoths and economies of scale
Prompted by the prospects of economies of scale, liner companies, especially those operating between Europe and Asia, have been ordering ever larger containerships, the most recent ones reaching an overwhelming 24,000 TEUs.
Based on the data from VesselsValue, there are 176 ULCVs already operating in the global fleet, including 77 20,000+ TEU containerships.
There are 60 ULCVs on order, all of them featuring 20,000 TEUs or even larger.
For these giants of the seas to be effective investments, they have to be filled to their full capacity, which can often be a challenging task during demand swings.
Furthermore, handling these vessels is another issue. Only specific ports on Europe to Asia route have the sufficient water depth and container handling capacity to operate these behemoths.
The question of size and when ULCVs would be big enough keeps reemerging in the sector – the continuing dilemma being whether the economies of scale really pay off or if they are actually diminishing.
Owners seem to be reluctant to give up on those prospects.
Specifically, following an almost year-long hiatus in the ordering of new containerships triggered by the pandemic, owners are lining up again at major shipyards to order boxships, opting predominantly for ULCVs.
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