In 2021, the world was beginning to recover from the devastating effects of the COVID-19 pandemic. However, the commercial fallout continued in the form of a major semiconductor crisis that led to widespread shortages of devices like the PS5. The Ever Given shipping disaster, which blocked the Suez Canal for a few days, was enough to disrupt world trade during that year.
Experts recently estimated the losses from the incident, which amount to only a fraction of the millions of dollars incurred. In short, it was chaotic.
Ever Given. Sea transport remains critically important. Around 80% of the world’s trade is transported by sea, accounting for 70% of the value of trade goods. While sea transport is slower than alternatives like air travel, the enormous carrying capacity of container ships means that transport costs are significantly lower.
One of the largest container ships in the world, the Ever Given, weighs 200,000 tons, is slightly over 1,300 feet long, and has an impressive cargo capacity. When it became lodged in the Suez Canal on March 23, 2021, it caused a bottleneck of 422 ships waiting to cross at both ends of the canal.
A million-dollar chaos. The incident involved 89 container ships. Interestingly, even though the Ever Given was cleared on March 29, the resulting traffic jam took almost another week to clear. This situation affected other ships arriving after the incident. To manage the blockage, the daily crossing rate was increased from 50 ships to 100 ships per day. However, the accident had already taken a significant toll.
A study conducted by researchers at the University of Antwerp estimated that the total losses for the vessels carrying Maersk containers (69 ships in total) reached $88.79 million. Of this amount, $8.04 million was attributed to ship costs, while $76.29 million was related to inventory-carrying costs.
Environmental costs. Experts estimate that the value of the goods onboard was $26.5 billion. Additionally, the Suez Canal Authority incurred a loss of $5.86 million just for managing the container ships from Danish shipping company Maersk. As such, the overall financial impact is reported to have been astronomical.
Moreover, the blockage had environmental costs as well. Around 44,574 tons of CO2 were emitted due to the rerouting of cargo ships and the additional waiting times for the Maersk vessels. The estimated environmental costs are $4.46 million.
Fragility and significance. The data presented in the study don’t represent the total impact of the blockage, given that the focus has primarily been on Maersk’s goods and not other companies involved. However, the staggering figures give insight into the consequences of a blockage lasting less than a week at one of the most critical points in global trade. Worryingly, this isn’t an isolated incident.
Similar disruptions affect all sectors, including the maritime industry, the Egyptian economy, and manufacturers, retailers, wholesalers, and customers worldwide. This creates a ripple effect that disrupts the global supply chain. Additionally, the Ever Given blockage wasn’t the first incident requiring the canal’s closure, which impacts the entire ecosystem.
Accidents and attacks. Disruptions can arise from accidents caused by human error or natural events. The global trading system has recently been challenged by conflicts in the Red Sea, which have hindered or slowed down container ship transit through the Suez Canal. This situation underscores the risks posed by human actions, including cyberattacks.
In fact, the study highlights that cyberattacks on ships and ports rank fourth among shipping risks, making them prime targets in cyber warfare, regardless of their size, cargo, and ownership. One notable example is the NotPetya attack on Maersk’s global network in 2017, which cost the company between $250 million and $300 million and resulted in a months-long delay in operations.
Even though we live in an interconnected world, the global economy heavily relies on a few critical points, whose failure can trigger an overwhelming impact.
Image | M Abnodey
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