(TargetLiberty.org) – The massive cargo ship, the Ever Given, was finally freed from the Suez Canal on March 29 after having blocked the shipping lane for nearly a week. An investigation is underway, and experts predict it will take months for the economic impact of the incident on global supply chains to get back to normal.
The 1,300-foot Golden-class container ship ran aground on March 23 after reportedly being clocked while traveling at nearly double the speed limit set by the Suez Canal Authority.
The ship’s technical manager issued a statement on March 29, advising that the company’s initial investigation ruled out any “mechanical or engine failure” for the incident. Instead, the initial inquiry suggested the ship “grounded due to strong wind.” Business Insider reported that at least one other vessel delayed traveling through the canal until the wind calmed.
Long-Term Damage Estimates
The Suez Canal Authority Chairman, Osama Rabie, told Egyptian television that the total losses and damages from the incident could reach as high as $1 billion.
According to a report from CNBC, about 12% of the world’s trade travels through the Suez Canal daily. Estimates suggested the resulting damage cost roughly $400 million for every hour the Ever Given blocked the 120-mile waterway.
Stephen Flynn, a political science professor at Northeastern University, predicted that the week-long disruption of shipping would have long-term “cascading effects.” In other words, it would take “at least 60 days” before shipping levels out and things “appear to be a bit back to normal.”
No Simple Reset
Almost 19,000 vessels traveled through the Suez Canal in 2020, averaging 51.5 ships daily. By the time tugboats were able to free the Ever Given, more than 350 ships waited in a nautical traffic jam on both sides of the canal.
As Flynn noted, sorting out the aftermath of the blockage has just begun. Getting everything on track is not as simple as pressing “reset and restart.” Coordinating enough traffic to make up the loss of six days of traffic will take some time.
The long-term impact on American markets is still hard to predict. Flynn says it’s a certainty that prices in the United States will increase in the wake of the incident. However, University of Notre Dame finance professor Jeffrey Bergstrand anticipates a nominal effect on imported goods prices.
We will keep you updated on this breaking story as new information becomes available.
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