The Ever Given (a ship owned by the Evergreen shipping line), one of the world’s largest cargo ships, was passing through the Suez Canal on its way to Rotterdam from Malaysia when it became stuck and blocked the canal on the 23rd of March 2021. The ship ran aground diagonally after losing the ability to steer amid high winds and a dust storm. The ship ended up with its bow wedged in one bank of the canal and its stern nearly touching the other.

The Ever Given was pulled from the sandbank and finally set free 6 days later, raising hopes that one of the world’s most vital maritime routes would rapidly bounce back and limit the aftermath of a disruption that had paralysed billions of dollars in global trade.

Within hours, other ships awaiting transit through the 120-mile-long waterway, held up for almost 7 days, fired up their engines and began moving again.

Over this period of time, alarm bells rang over how this could impact the economy and its increasingly connected global supply chains.

Shipping industry journal Lloyd’s List estimated that the blockage is hindering roughly $9.6 billion worth of goods per day in container cargo alone. As containerised load represents just 26% of total traffic through the canal, the outlet estimates that the genuine complete value of goods being held up is likely a lot higher.

About 12% of global trade passes through the Suez Canal, which connects the Mediterranean Sea to the Red Sea and creates the shortest maritime link for goods travelling from Asia to Europe. The stalemate comes as an estimated 90% of global trade is transported by sea, according to the Organization for Economic Co-operation and Development.

How did this impact oil prices?

Of the 39.2 million barrels per day of crude imported by seaborne methods in 2020, approximately 1.74 million barrels per day pass through the Suez Canal (5% of total flows), according to data from research firm Kpler.

Oil prices increased last Friday, amid speculation that dislodging the ship could take weeks. West Texas Intermediate crude futures and Brent crude each advanced more than 4%. This increase comes after prices dipped last Thursday, despite the impasse.

How did this affect consumers?

In addition to the 1.7 billion barrels of oil, there are several other goods that float through the canal every day – including apparel, footwear, accessories and home goods.

The total damage and cost is difficult to evaluate until the ship is fully freed and trade resumes. Firms were still waiting on goods to arrive last Friday and some even had containers stranded on the Evergreen.

Despite globalisation, this episode shows how fragile supply chains are to shocks…