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The Ever Given Continues to Impact Supply Chains Despite Being Freed from the Suez Canal

Blog Supply Chain

The world received exciting news this week as a 220,200-ton cargo ship named the Ever Given was freed from the Suez Canal after being stuck for six days. The Suez Canal is one of the most important trade arteries in the world. It connects Asia to Europe and the U.S. East Coast. On average, 50 ships pass through the canal daily. It stretches to cover 120 miles and aids in the transport of up to 12% of commercial shipping and about 2.5% of the world’s oil. It’s pretty clear that there are a number of businesses counting on their freight being able to pass through the canal. While it’s great news that the Ever Given is out of the way, the effects of the unexpected pause in transit are ongoing.

When the Ever Given first got stuck, there were at least 360 ships waiting at the canal’s northern and southern entrances. Roughly 300 ships were scheduled to pass through the Suez Canal in the following two weeks, meaning the pressure was on for salvage crews working to set it free. However, it quickly became clear that it wasn’t going to be an easy fix. By the third day of the jam, many carriers were starting to consider an alternate route.

Those who aren’t passing through the Suez Canal have to travel around Cape of Good Hope which is located on the southern tip of Africa. This alternate route takes considerably longer – ships traveling via the Suez Canal to Port of Rotterdam (Europe’s largest seaport) can make it there in roughly 18 days while going around the Cape of Good Hope takes over 31 days. Carriers taking longer to reach their destination also means they’re going to have additional expenses – the voyage around Cape Hope can cost more than $26,000 in fuel daily. 

While it’s great news that the Ever Given has been freed from the Suez Canal, the accident’s effect on supply chains around the world is far from over. Ships that made the decision to travel around Cape of Good Hope can’t just turn around and those who waited face a significant increase in congestion.

Even though this ordeal has only been going on for a week, companies are already feeling disruptions throughout their supply chains. Shortly after the Ever Given got stuck last week, Nike shared that its imports have dropped 39%. While demand for their product has held steady, port congestion has played a huge role in their struggle to effectively distribute. The factors surrounding this decrease include container shortages, transportation delays and port congestion – all of which may cause an even bigger strain as companies attempt to recover from the last six days. 

Popular retailers like Walmart and Ikea and automotive and technology companies all rely on the passing of product through the Suez Canal. With everyone looking to leverage the same channel to recover from the delays experienced this past week, it’s important that companies stay organized and leverage visibility throughout their supply chain to communicate any changes!

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