Experts said the week-end closing of the Suez Canal would continue on the economy despite the large container ship being freed on Monday.
Ever seeing that the giant ship has blocked the highly traffic waterway since 23 March, it broke free on Monday, a major step towards moving again to one of the world’s most important trade arteries Was.
Interruptions in global trade cost about $ 10 billion per day, emphasizing supply chains that were already expanding during the coronovirus epidemic. Based on a rough calculation by the list of maritime intelligence company Lloyd, the closure resulted in a loss of nearly $ 400 million in cargo every hour. Overall, it impacts about $ 5.1 billion a day in westbound traffic in Europe and $ 4.5 billion in daily eastbound traffic.
While the long-term impact of the weekend’s closure will likely mean that global merchandise trade will block volumes of $ 18 trillion per year, the interruption has caused bottlenecks due to ships being thrown off schedule. Some 450 ships carrying freight are now expected to be delayed to reach their final destination, not for months, but for weeks.
Companies ranging from Ikea to Caterpillar have been affected, along with tens of thousands of live animals, mostly sheep, stuck on ships in the area. Large-scale shipments of consumer goods such as coffee, oil, toilet paper, and even sex toys have been jammed.
The dozen or so container carriers that control most of the world’s sea freight are already charging record high fees due to a shortage of chemicals and wood to dockside labor on some routes, Bloomberg reported
.
“Dominoes have become topless,” wrote Lars Jensen, chief executive of the Scientific Consulting in Copenhagen. “Delays and re-routing that have already occurred will create ripple effects” will be felt for several months.
During the week, Egyptian officials were desperate to get traffic again through the canal, which is about 12 percent of world trade and a channel of about 1 million barrels of oil a day. It remained the longest canal closure after being closed for eight years after the 1967 Six-Day War.
Douglas Kent, executive vice president of Supply Chain Management Association strategy and alliances, said even if the ship was towed, it would be difficult to determine the economic impact of the halt.
Kent told CNBC, “On a complete knock through the multi-hierarchy of the supply base – we are not finding it.” “Companies do not have visibility in the supply chain.” While a company may be aware that it has a product sitting on a ship, the effect of the delay further down the line is unknown.
Fitch’s chief economist Brian Cultern told The Post that the possibility of the Suez Canal’s deterioration would have no impact on GDP, but could put pressure on global inflation.
He said rising prices of oil and other commodities were already affecting pricing, and that the Suez Canal incident was “putting an end to all that.”
“We’re going to see headline inflation rates picking up fairly quickly in the US,” Coltron said, noting that the uptick will be determined when navigation can return to the canal normally.
“If things return to normal by the end of the week, I don’t expect a major impact,” he concluded.
Leave a Reply