Suez Canal blockage disrupts global supply chains, commodity flows, but unlikely to set back Covid-19 recovery
- Disruptions to manufacturing supply chains and container flows, higher shipping costs and short-term inventory shortages are likely following the blockage in Egypt’s Suez Canal
- The Ever Given, a container ship that is longer than the Eiffel Tower, shows no signs of budging after it became stuck on Tuesday, causing a massive traffic jam at a world trade chokepoint
The Suez Canal blockage will strain manufacturing supply chains, deplete inventories of raw materials from oil to finished products like fertilisers and send shipping costs soaring, but it is unlikely to put a major dent in the recovery of the global economy, economists and analysts say.
The cost of the bottleneck is growing by the day, with some US$1.3 billion in crude oil and nearly US$50 billion in other goods now estimated to be delayed, according to supply chain specialist project44.
The number of vessels stranded in the canal – a crucial link between Asia, Africa and Europe – or just outside it has increased by more than 40 per cent since Wednesday.
As one of the world’s busiest waterways, “even the slightest delay in traffic can result in congestion and disturb the delivery of goods and commodities on both sides of the canal”, commodities analyst S&P Global Platts said in a note.