Analysis: When the Ever Given blocked one of the world's busiest maritime trade routes for a week, it also exposed the fragility of global supply chains to many.

By Sarah Schiffling, Liverpool John Moores University and Nikolaos Valantasis KanellosTU Dublin

For nearly a week, the Ever Given, a 400m long container ship, was wedged across the Suez Canal. Over 360 vessels were stopped. The incident received worldwide media coverage and triggered rare public interest in maritime transport. Ever Given inspired memes filled the timelines.

Today’s Comic: We are all, in our own little way, that ship. pic.twitter.com/GVDjLxzErX

— Chaz Hutton (@chazhutton) March 24, 2021

Shipping companies had to evaluate their options. Waiting in the maritime traffic jam caused significant losses, but the only alternative was to go around the Cape of Good Hope. This adds a week or two of travel time and carries security risks. Lawsuits are pending about compensation costs for late arrivals and insurance claims.

Most consumers are unaware that around 90% of the world's trade is transported by sea. 12% of it passes through the Suez Canal which shortens travel distance between Asia and Europe by a third. An average of 33 ships transit through the canal every day.

Between them, they carry up to $9bn worth of cargo and this highly-publicised incident has exposed the fragility of global supply chains to many.

Supply Chain Disruptions

The delay has immense effects on supply chains. Nearly 1.5 million barrels of crude oil pass through the Suez Canal each day. The blockage affected oil prices and while current oil inventory is high in most countries, Syria had to ration fuel due to a vital tanker from Iran being delayed.

Most traffic through the Suez Canal consists of dry bulk and container vessels. Containers are the Easter eggs of shipping: they can contain anything. The Ever Given alone carries 18,500 containers that could contain electronics, clothing, medical devices, or any number of other goods. This makes it difficult to gauge the impact on manufacturers and consumers.

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On Radio 1's News At One Samir Madani, co-founder of Tanker Trackers, discusses the partial refloating of the Ever Given supertanker, which has blocked one the world's busiest maritime trade routes for a week

Manufacturers operating on a just-in-time system of frequent deliveries are particularly affected by delays. For example, European bicycle manufacturers raised concerns as they already struggled to meet high demand while online retailers had to notify customers of delays.

Already congested ports are now struggling to handle vessels reaching them after the blockage. On the bright side, the timing of the incident was positive as March is not a busy month for maritime trade, in contrast to October when businesses prepare for Christmas.

Container Shortage

Many Western companies have outsourced manufacturing to Asia and transport goods to consumers by container vessel. This depends on containers being sent back to Asia. However, strong trade imbalances exist and for every 100 containers imported to North America from China, only 40 are exported.

The shortage of shipping containers is more pressing than a goods shortage. Demand for shipping has been very high during the pandemic, but operations are challenging.

Ports take longer to empty containers and make them available to be filled again. Many containers remain stacked in inland depots or port container yards.

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On 2FM's Dave Fanning show, the Suez Canal boat drew a penis before it started a traffic jam, an NFT house is bought for $500,000 and someone got their last paycheque in 90,000 oily pennies! It's Anton's stories of the week!

While there is a lack of empty containers around the world, the situation is worst in Asian exporting hubs. In January 2021, container freight rates from Asia to Europe reached $10,000 for a 40ft container.

Companies such as fashion retailer Next have struggled to get goods into containers in Asia. Hundreds of thousands of containers stuck at Suez worsened this crisis.

Infrastructure Concerns

114 ships of a similar size to the Ever Given had already traveled north through the Suez Canal in 2021 without any incidents but with the increasing size of vessels, the margin for error for passing through "choke-points" is very small. In 2016, the similarly sized CSCL Indian Ocean was stuck near the port of Hamburg.

Vessels may simply be outgrowing the maritime infrastructure. Since 2012, container shipping volume has increased by nearly 25%. The infrastructure has not grown at a similar speed with the largest vessels  already too big to navigate the Panama canal.

Both canals were constructed for smaller vessels. To remain able to satisfy demand for ocean freight, investment in global infrastructure needs to follow the developments in the size of vessels.

All parts of the infrastructure in global supply chains are affected by large container ships. Ports need to invest in berths and container cranes capable of handling them.

The increased number of trucks for onward transport puts pressure on inland infrastructure. Increased rail connectivity of ports could solve this issue while investment in IT systems that regulate the approach of trucks to ports is also important.

Risk and Resilience

When supply chains are running smoothly, we rarely notice them but the prospect of shortages reminds us of where the products we buy come from and how we reach them.

The blockage of the Suez Canal highlights the vulnerability of global trade. Technological advances and trade liberalisations have enabled the off-shoring of production in search of cost efficiencies. The COVID-19 pandemic and the Ever Given incident have exposed the risks of the increased distance between production and consumption.

Lean, efficient supply chains might no longer fit a vulnerable, uncertain, complex, and ambiguous world.

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On Radio 1's The Business, Imagine your mistake causing a hold up of $9.5 billion goods a day and a tail back of ships that would have made the M50 look like a quiet country road back in the day. Well that's what is currently happening in Suez Canal. We're joined by Graham Parker from Kontainer.com

Digitisation, automation, and a growing awareness of environmental consequences were already heralding shrinking supply chains. Recent disruptions have highlighted the need for resilience and as a result, the pace of global supply chain shrinkage could accelerate.

This is supported by the known relationship between world GDP and seaborne trade. The economic crisis that is expected after COVID-19 will decrease the demand for seaborne trade and will reshape global supply chains.

This might be for the best as the current model has proven to be problematic and risk intense. Shorter supply chains will benefit the rejuvenation of local economies as they will have greater resilience and flexibility, and reduced environmental footprint. Reduced risk will be reflected in lower insurance cost.

We need to re-evaluate demand and supply patterns and use incidents like this as opportunities for reflection on resilience, infrastructure, and global trade.

Now that vessel traffic has resumed in the Suez canal, public attention is shifting and the Ever Given memes are disappearing. Supply chains will return to regular patterns and the blockage might soon be forgiven and forgotten. That is, until the next incident.

Dr. Sarah Schiffling is a Senior Lecturer in Supply Chain Management at Liverpool John Moores University, UK, and an International Research Fellow with the HUMLOG Institute in Helsinki, Finland. Dr. Nikolaos Valantasis Kanellos is a lecturer in Logistics at the School of Transport Engineering Environment and Planning at TU Dublin in Ireland.


The views expressed here are those of the author and do not represent or reflect the views of RTÉ