Chinese container stuck in Suez Canal causes more than one problem

BNR Nieuwsradio

A huge Chinese container ship is stuck in the Suez Canal and blocking the way for many ships that would now have to divert via South Africa. According to the CEO of Boskalis, this will not be solved overnight. Bart Kuipers, Senior Researcher Port Economics at Erasmus School of Economics is a guest at BNR news radio and talks about how the situation could lead to severe economic damage. 

Major delays

Because of the blockage, there are endless container ships waiting. 'If this takes weeks then there will be major delays in all kinds of chains. Then ships will have to divert via South Africa, which means that it will take them about 2 weeks longer. That means that the cargo will be on the road longer. For a lot of cargo this has no consequences because there is extra time in those chains anyway, but for other cargo it can have very big consequences. There, it could cause economic damage. It is therefore of great importance that Boskalis resolves this as quickly as possible.'

A vulnerable system

The detour that many ships would have to take is also a challenging route. 'Ships often sail around this. They did take the route last year at the beginning of the corona crisis, but that was an emergency solution. But staying put is not an option either.' Another additional problem is that it becomes super expensive to export, partly because of a severe shortage of containers. This is something that the sector absolutely cannot have right now.' According to Kuipers, this goes to show how vulnerable the whole system actually is.

A worsening situation 

For the port of Rotterdam, the blockage means a lot of uncertainty. ‘It's quiet now, but after that ships will come to the port en masse. They will remain in front of the port until there is more capacity. This worsens the situation even further. A large proportion of the world's oil tankers go through the Suez Canal. The resulting change in oil prices was actually not too bad, with a drop of about 1%. But Rotterdam gets most of its oil from Russia, and refinery supplies can also come from alternative sources, provided the situation does not take too long.'

More information

The full item from BNR news radio, 25 March 2021, can be found here (in Dutch).