Ever Given is dislodged but myriad supply chain challenges remain intact

Various media reports have indicated that the 20,000 TEU (Twenty-Foot Equivalent) vessel Ever Given, which last week ran aground and was tapped in the Suez Canal, is now moving again.

This is a positive development, with cargo moving through the Suez Canal accounting for about 10% of total seaborne trade activity, with estimates that the actual number of vessels that were forced to remain in a holding pattern was in the hundreds, with the possibility that the delays caused by this situation could result in an additional 10 days of extra time, with ships rerouted to longer journeys, according to a recent NBC News report.

What’s more, this situation came at a time when current ocean shipping market over the course of the pandemic have dealt with tight capacity, escalating rates for shippers, and a container imbalance, among other issues.  

As for how the Ever Given was dislodged from its holding pattern, the Associated Press reported that salvage teams today set the vessel free, adding they were helped by the peak of high tide, and a flotilla of tugboats managed to wrench the bulbous bow of the vessel from the canal’s sandy bank.

In a research note, Chris Rogers, Director of Research for global trade intelligence firm Panjiva, wrote that while the Ever Given has been partially refloated in the Suez Canal, a complete refloating, testing and onward travel to the Great Bitter Lake is needed before traffic on the canal will be restarted. 

“The six-day delay has caused a backlog of around 370 vessels,” he wrote. “The all-time record for vessels passing through the canal was 75 vessels. Assuming this rate can be maintained that would suggest at least 15 days of shipments above the ‘normal’ 50-60 vessels per day run rate to clear the current backlog. Other vessels have decided to use the southern Africa routing that adds around 10 days to 14 days to shipping. The knock-on effect to supply chains is also complicated by the congestion at many ports in Asia and Europe. While the absence of a week's worth of Suez-routed arrivals may help clear immediate backlogs, a wave of new arrivals and the need to rapidly move products onward from ports.”

While the Ever Given is no longer grounded, Johnathan Foster, Principal Consultant at Proxima, observed that this situation is likely to further complicate matters at European and U.S. East Coast ports.

“The only positive in the situation is that this could actually allow some initial easing of the pressure for ports as there is at a minimum lessening of volume to the port locations which was rightfully pointed out by a Hapag-Lloyd spokesman,” he said. “This would allow the ports to in essence partially clear the deck in preparation and take care of issues such as inefficient container stackings, placements, maintenance, etc. This is the ‘calm before the storm’ and a wave of ships are waiting, which will amplify expedition and the demand for chassis, dray capacity, warehouse space and the subsequent labor. In Europe, ports will likely be very slow while capacity is likely partially rerouted through the Panama, but there will be significant delays of goods in Europe and on the US Coast. Retail inventories were already at record lows and this will only amplify the problem.”

And with re-routing processes expected to add about 10 days to typical journeys, Foster explained that all industries that rely on infrastructure will be affected and no one will be immune. 

“Containers are agnostic to who loads them and capacity will be impacted,” he said. “This will take weeks, if not months, to navigate. Impacted businesses in the U.S. may have to temporarily import more through the West Coast, but that is already backed up. The timing of these issues couldn’t be worse and it is simply one more thing to build on the year of dynamic disruption and the subsequent continuation of it.”