In the weeks to come supply chains are preparing for the knock on effects of the Suez Canal blockage with expectations of congestion, delays and increased costs.
The Institute of Export and International Trade has raised concerns over import surges that are expected to hit European ports following the removal of the Ever Given ship that has been blocking the Suez Canal.
The wedged ship Ever Given was finally freed on 29th March, leaving a trail of around 100 container ships waiting to enter the canal. Although some of those cargo ships would have been empty or headed to other destinations, roughly 52% of the canal capacity each week heads to Europe according to the Institute of Export and International Trade.
Eleanor Hadland, senior ports analyst at maritime research consultancy Drewry has stated “From our perspective, it is going to be more chaos and more congestion.” The situation is badly affecting the US west coast where a lack of capacity means ships have to anchor for up to two weeks before unloading and In Europe, carriers are being given the option of diverting course to smaller, less busy terminals, Hadland said.
The International Federation of Freight Forwarders Associations have said that the disruption of the supply chain was expected to “worsen dramatically” over the next coming weeks. They have also stated that this would create “high delays in shipments, increased costs and product shortages.”
Freight and logistics publication Loadstar has reported that currently air freight is currently operating at full capacity, predicting that it will take approximately two weeks for the impact of the crisis to begin to “unravel”.
“Capacity is already an issue with greater use of air for test kits and vaccines”, said Ekaterina Andreeva, commercial director for Russian air cargo carrier Volga-Dnepr. “We can predict a busy market for a couple of months, but maybe it will lessen over the summer. Rates though could be elevated until the end of the year,” she said.
As the world looks to the cost of the Ever Given blockage, John Neal the CEO of Lloyd’s of London told the Evening Standard that potential losses to the market from the blockage of the Suez Canal would be in the “hundreds of millions” but said that the claims were easier to deal with than they are having to with Covid, which up to this point has cost Lloyd’s £6.2 billion in payouts.
“It is the very type of loss we are used to,” John Neal said. “It will be quite a big marine claim, but not particularly out of the ordinary.”