World’s largest Shipping Traffic Jam; Giant Container Ship stranded in Suez Canal.

Many people would have heard of the news of a large ship stranded across the Suez Canal, an area which is very vital for the movement of ships. We will go through the events which led to this occurrence but we will first study and try to find the details of the Suez Canal-

Some facts about the Suez Canal-

· The Suez Canal is the first canal that directly links the Mediterranean Sea to the Red Sea.

· It was opened for navigation on the 17 th of November 1869.

· Egypt nationalized the canal on the 26 th of July 1956.

· The canal has been closed five times and the most serious closure was the one that lasted for eight years.

History of the Ancient West East Canals on River Nile

We learn a lot about Egyptian Canal construction from the inscriptions on the tomb of Weni the Elder (2407–2260BC), and the reasons for building them i.e. for sending warships and transporting monument stone.

Egypt was the first country in the world to dig a man-made canal across its lands to connect the Mediterranean Sea to the Red Sea through the branches of the river Nile and the first person to get the work done was Senausert III the Pharoah of Egypt(1874 B.C.). As the sand used to flow into the river, many times it was abandoned due to the silting, as the ships could not move.

The canal used to be abandoned and we know of the successful reopening by Sity I(1310 BC), Necho II(610 BC), Persian King Darius(522 BC), Ptolemy II(285 BC), Emperor Trajan (117 AD), and Amro Ibn Elass (640 AD)after the Islamic conquest.

Under Necho II, a canal was built between the Pelusian branch of the Nile and the northern end of the Bitter Lakes, costing 1,00,000 lives. Over the years the canal fell into disrepair, extended, abandoned, and rebuilt again.

Amro Ibn Elass rebuilt the canal after the Islamic takeover of Egypt and it was used for transporting grain to Arabia and pilgrimages to the Holy Land. The canal was stopped in 767 AD by the Abbasid caliph El Mansur to cut off supplies to insurgents located in the Delta and to starve rebels in Medina.

Rebuilding in the Modern Times

The first efforts to build a modern canal came from the Egypt expedition of Napoleon Bonaparte and the project was begun in 1799 by Charles Le Pere, but a miscalculation estimated that the Red Sea was ten meters higher than the Mediterranean Sea and the work was suspended; giving up the whole idea.

In 1833 a group of French intellectuals arrived in Cairo and were very interested in the Suez Canal project but Mohammed Ali; Pasha of Egypt, was not interested in the project and most of the twenty engineers returned to France. In 1854 French diplomat Vicomte Ferdinand was successful in enlisting the support of the Egyptian viceroy Pasha Said for the project.

In1858 a Universal Company of the Maritime Suez Canal was formed to cut and operate the canal for 99 years after which the ownership would return to the Egyptian government. The company was a private Egyptian concern with the stock owned by the French and Egyptian interests. In 1875, the British government purchased Egypt’s shares.

​A study estimated that a total of 2613 cubic million feet of the earth would have to be removed with 600 million on land and 2013 million dredged from water and the estimated cost was pegged at 200 million francs. When the company ran into financial problems Pasha Said purchased 44 percent of the company to keep it in operation.

It took ten years for the completion of the 160-kilometer long waterway with the poorly compensated Egyptian workers toiling; drafted at the rate of 20,000 every ten months, from the peasantry.

When the Suez Canal was completed there were massive celebrations at Port Said and the extravaganza began with fireworks and a ball attended by six thousand people. There were many heads of state including Empress Eugenie, the Emperor of Austria, the Prince of Wales, The Prince of Prussia, and the Prince of Netherlands. Parties continued for many weeks.

The British government in 1875 purchased shares from Egyptian interests, but France continued to have a majority interest. The canal remained under the control of the two powers until Nasser nationalized it in 1956 and from then onwards it has been operated by the Suez Canal Authority. There was a brief period of closure during the British-French –Israeli invasion of Egypt in 1956 and the second time after the June 1967 war with Israel and lasted till 1975.

When the canal opened in November 1869 its depth was 8 meters, water area 304 meter square and the largest shipload that could pass was 5000 tons. The canal was developed further as the size of the ships increased. In May 1962 the water area of the canal was 1800 meters square, the depth 38 feet. The ship draft reached 66 feet in 2010. The canal will be able to take 99% of all methods used in world maritime transport after reaching a depth of 72 feet.

The vessel Evergiven got stranded in the Suez Canal on Tuesday

The Suez Canal is the artery of world trade and connects the Mediterranean with the Red Sea thereby providing vessels to pass between Asia, Middle East, and Europe.

The alternative route for the vessels to pass is around the Cape of Good Hope at the Southern tip of Africa and takes a much longer time. For example, a ship’s journey between a port in the Persian Gulf and London, United Kingdom via the canal is roughly half of what it would take for it to go around the southern tip of Africa.

On average 50 vessels pass through the Suez Canal in a day; on busier days the number can be much higher. The route accounts for 12% of the world trade.

On Tuesday the 23rd March, the vessel Evergiven got stuck amid high winds at 07:40 local time (05:40 GMT). The 400 meters long, 224,000 tons Evergiven ran aground after losing the ability to steer amid high winds and a dust storm. The ship has blocked the path of other vessels which are trapped in both directions and this has threatened to disrupt the global shipments for days. The route accounts for 30% of the world’s container traffic and is also important as an avenue for oil and liquefied gas.

Nearly 19,000 ships passed through the canal in 2020 according to the Suez Canal Authority. The question now is how long the route remains impassable and the delays would cause problems for shippers delaying the consignments of goods and fuel.

The ship Evergiven is registered in Panama and is operated by the shipping company Evergreen and was bound for the port city of Rotterdam in the Netherlands from China.

The company that manages the ship Bernard Schulte Shipmanagement said that all the crew was safe and accounted for. There has been a traffic jam on both sides of the vessel as the ships are unable to pass through.

Fourteen tug boats are working to refloat the ship, and diggers on the ground have been removing sand from where it is wedged into the side of the canal bank.

Many oil tankers carrying crude and refined products were affected by the jam and this caused the crude oil prices to rise by 6% on Wednesday on the International markets. A large part of the cargo moving from West Asia to Europe is oil. But the ships moving towards Asia and the Far East carry manufactured goods from Europe and North America.

India is the top importer of crude oil getting 5 lakh barrels per day via the Suez Canal and next is China which gets 4 lakh barrels; next on the list are South Korea, Singapore, and the Netherlands. Major oil producers like Russia, Saudi Arabia, Iraq, and Algeria are the top exporters of crude via the Suez canal each shipping more than 2 lakh barrels per day.

The delay in the delivery of oil and products will escalate shipping costs and impact global trade.

In 2017, similarly, a Japanese container vessel blocked the canal after it ran aground and the Egyptian authorities used tugboats to refloat the ship within hours.

Insurance Claims

The owner and insurers of one of the world’s largest container ships stuck in the Suez Canal face claims totaling millions of dollars from the Suez Canal authority for loss of revenue and from the other ships nearby whose passage has been disrupted.

The ship was insured in the Japanese market and the container ships of this size are likely insured for hull and machinery damage of $100-$140 million. The cost of salvage operation is borne by the hull and machinery insurer and Smit Salvage has been hired to help with the operations.

Other than this the owners of the cargo onboard the ship and the ships stuck in the canal will also claim from the ship’s liability insurer for losses to perishable goods or missed delivery schedules.

The Suez Canal Authority is trying to refloat the vessel with the help of the tugboats. If the vessel refloats this would be good news as the vessel traffic would be normalized in a few days otherwise we can expect a delay in delivery of consignments with the escalation of shipping costs.

References

Suez Canal Authority