International News

The Incident of Evergreen On The Suez Canal

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Author : Bozhou Marine
Update time : 2021-03-29 11:22:28
The Suez Canal has been accidentally congested and suspended for four days. As the rescue work to clear the blocked ships failed again on Friday, tensions in the cargo market continue to rise, and the relevant economic impact is beginning to show.

Freighter data shows that the number of freighters stuck in the Suez Canal has reached approximately 293, compared with 238 the previous day.

  Failed to escape

According to the overseas network, in the rescue operations in the past few days, the rescue team first used excavators to dig on the shore to help the bow of the freighter that was inserted into the canal bank due to loss of control to get out of trouble, and cooperated with multiple tugboats in both north and south. Hope Push the "Long Give" to the north and leave. However, the "Long Give" is huge and the draught is too heavy. On the 25th, the Suez Canal Authority transferred sand dredgers to pump sand under the trapped bow day and night.

It is reported that the "Evergreen" is 400 meters long and has a displacement of 200,000 tons. It lost its ability to maneuver in strong winds and sand and dust. It "stuck" in the Suez Canal in Egypt on the 23rd local time, causing serious blockage of the river. There are long queues of freighters on the waterway, and a large number of ships are waiting to pass.

As of the morning of the 26th, the dredger had cleared about 17,000 cubic meters of sand from around the bow of the stranded ship, achieving 87% of the target. But then the news came that the use of tugboats to turn the stranded cargo ship in the right direction was not successful. To this end, the rescue team changed its plan and planned to reduce the draught of the cargo ship by pumping water from the interior of the cargo ship, so that the ship could float as soon as possible.

Although the excavation operation has not made significant progress, the rescue team expects that the high tide of the Suez Canal on March 27 will bring enough buoyancy to the cargo ship. Therefore, starting from the evening of the 25th, the expert team has also carried out a weight reduction assessment and began to unload the cargo ship of excess weight.

Rescue vessels are operating at the site where heavy cargo ships stranded on the Suez Canal in Egypt.
Photo/Xinhua News Agency (Photo courtesy of the Suez Canal Authority)

Peter Berdowski, head of the parent company of Smit Salvage, a Dutch professional salvage team urgently hired by Evergreen Shipping to operate this ship, said in an interview with the TV station: “We don’t want to predict the progress. The current risk situation is extremely complex and the fastest. It can be ruled out within a few days, and the slowest time will take several weeks.” Although the Suez Canal “sea traffic congestion” slowly appeared various negative knock-on effects as time went on, Bedowski emphasized: “If the pursuit is To escape safely, the whole task is really in rush. Maybe the worst case is that the stuck freighter breaks in half at the Suez Canal."

The British Broadcasting Corporation reported that analysis believes that although it is a safer way to give priority to the removal of fuel and ballast water, the weight removed is probably not enough to help the "Evergreen" get out of trouble, and the tide time is approaching, so the overview In terms of various situations, the teams concerned are indeed extremely anxious.

  Japanese shipowners apologize, or need to pay more than 900 million yuan

According to shipping data and the list of news company Lloyds, the trade loss caused by the blockage of the Suez Canal by the freighter is approximately US$400 million (approximately 2.4 billion yuan) per hour. British Chartered Institute of Purchasing and Supply Economist John Glen (John Glen) pointed out on March 25 local time that if the canal is closed for too long, it may seriously damage the supply chain in the relevant area.

The Japanese owner of the Long Grant has already apologized for the accident affecting global trade.

The owner and owner of the ship, Masei Steamship Co., Ltd. (from Ehime Prefecture, Japan) stated that they are trying to solve this problem as quickly as possible, but it turns out that it is very difficult to move the huge ship out.

"Zhengrong Steamship" said in a statement on Thursday: "We are cooperating with local authorities and the Bernhard Schulte Shipmanagement company (Bernhard Schulte Shipmanagement) to try to make the'Long Gift' float, but we are facing extremes. Great difficulties. We sincerely apologize for the great concerns that have been caused to ships and related parties that are sailing on the Suez Canal and planning to pass through the canal."

An investigation by Allianz Global Enterprise and Specialty Business Unit (AGCS) shows that stranding is not a rare phenomenon, but the most common cause of canal shipping accidents. There have been 25 cases in the past 10 years.

But the accident was unusual. Some shipping lawyers believe that this may become the world's largest container ship claims disaster. A series of major insurance claims including the Japanese shipowner Shoei Kisen KK and its insurance company may face claims from the Suez Canal Authority. Ships that are disrupted and interrupted in traffic will also file claims for loss of income; only the hull and machinery of the container ship The damage compensation amount may reach 100 million to 140 million U.S. dollars (about 910 million yuan); and the owner of the goods carried by the affected vessel may also file a claim for damage or delay in delivery.

Rahul Khanna, head of AGCS Global Marine Risk Consulting, said that the Canal Authority is also very likely to impose a fine on the shipowner and file a claim for damage caused by the canal.

  Block the vessel or just detour to South Africa

Shipping experts believe that if it is unlikely that the blockage will be cleared in the next few days, some shipping companies may have to consider rescheduling their ships to detour the southern tip of Africa, which will add about a week to the sea trip.

The Suez Canal in Egypt was manually excavated and opened in 1869. It connects the Mediterranean and the Red Sea. It is the throat of Asia-Europe maritime traffic and one of Egypt’s largest sources of foreign exchange income. In 2015, the Egyptian authorities completed the expansion of the canal, and the new canal can accommodate the largest ships in the world.

In recent years, about 12% of global trade volume has passed through this 120-mile long narrow waterway. Manufactured products such as clothing, electronics, and heavy machinery travel from China and South Asia to Europe through the Suez Canal, which is also a key route for tankers to and from the Middle East.

According to data from the oil analysis company Vortexa, Russia and Saudi Arabia are the top two oil exporters through the canal, while India and China are the most important oil importers through the waterway.

Dr. Laleh Khalili, professor of international politics at Queen Mary University of London, is concerned that the prolonged closure of the Suez Canal could cause profound damage to the supply chain.

“About 50 huge ships cross the canal north and south every day. In any week, millions of gallons of oil, millions of tons of manufactured products, and hundreds of thousands of containers will pass through the canal,” she said. “The longer the canal is closed, the longer the ship The longer the team becomes, the slower the passing speed, and the original berthing time to the port will be disrupted.

  Shipping prices and global oil prices have soared, and aluminum prices have also been affected

Affected by this, the current freight rates of Capesize vessels have been rising. Some shipowners said that if the rescue work lasts for a long time, it may affect the freight rate of all segments. The freight rate of long-distance product tankers in the Asia-Pacific region has risen to a high in 2021 and is likely to rise again due to the accident.

According to the Russian Satellite News Agency on the 26th, citing Bloomberg's report, the blockage of the Suez Canal has blocked the passage of nearly $10 billion in cargo, which has caused the price of sea freight to soar. For example, due to the stranding of a freighter, the price of a 40-foot container from China to Europe has risen to nearly US$8,000 (approximately RMB 52,328), which is nearly three times higher than a year ago.

International oil prices also fluctuated sharply for four days. Both rose more than 4% on Friday. WTI broke through US$61 and international Brent oil prices returned to above US$64.

In the end, WTI May crude oil futures closed up 2.41 US dollars, an increase of 4.11%, to 60.97 US dollars per barrel, a cumulative decline of 0.76% this week. Brent May crude oil futures closed up 2.62 US dollars, or 4.23%, to 64.57 US dollars per barrel, a cumulative increase of 0.06% this week.

It is estimated that there are currently at least 16 oil tankers delayed due to the accident alone, carrying a total of 870,000 tons of crude oil and 670,000 tons of refined oil.

Industrial base metals are also being affected, especially aluminum prices. LME aluminum futures closed up 52 US dollars on Friday, reported 2298 US dollars / ton, again approaching the high of more than two and a half years.

The analysis said that this is mainly due to the sudden increase in aluminum demand. The blockage of the Suez Canal has exacerbated supply concerns. "The blockage of the canal is threatening the shortage of rare aluminum products in the world, which is vital to the transportation and construction industries."

Kamil Wlazly, a senior metal analyst at the consulting firm Wood Mackenzie, pointed out that the situation is getting a little crazy, and the Suez Canal crisis may worsen the situation. As the output of European and American factories increases and buyers make up inventory in advance, the supply of aluminum billet is rapidly shrinking.

Research organization Harbor Aluminium also said that as many as three ships carrying 25,000 to 75,000 metric tons destined for the United States are currently blocked, which may increase the overall price of special aluminum by another 2%, and may also increase the transportation cost of aluminum. To approach the highest level in history, “the usual 75,000-ton transportation delay for one or two weeks is not a major issue. Now that all ships are affected, it adds to the bullish psychology.”

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