When the Ever Given got wedged in the Suez Canal, one of the world’s busiest shipping lanes was immediately brought to a standstill. It took approximately a week to free the vessel before free passage was possible again.
That means the delays caused by the stuck ship may have cost over $10 billion in global economic impacts to various industries. Nearly 400 vessels were stuck in a tailback waiting to bass through the canal.
Approximately 12% of global trade passes through the canal, including around one million barrels of oil daily. Another 8% of the world’s liquefied natural gas is also there. Before the pandemic, the Suez Canal was responsible for about 2% of the total GDP.
Why Is the Suez Canal Essential to Global Trade?
When goods get shipped from Southeast Asia, the fastest trip to Europe isn’t around the Cape of Good Hope. Shipping can travel toward the Middle East instead, using the Suez Canal to enter the Mediterranean Sea to come around the top of the African continent instead.
This journey saves about 3,500 nautical miles when goods need to reach northern Europe. It’s significantly faster for ports in Italy, Greece, and Turkey.
Shippers save about 9 days on their shipping time by using this route. Although air freight is often faster, it costs three times more to transport the items. Those costs get pushed to the customer, reducing demand for the items.
Since the Ever Given is over 1,300 feet long and weighs 200,000 tons, moving the vessel proved to be challenging. They waited until high tide, dug some sand out from underneath it, and used more than a dozen tugs to rotate the ship.
Although the Suez Canal is free, the Egyptian government seized the Ever Given over a $916 million fine.