Alternative routes and global consequences of the Suez Canal crisis

The crisis breaks the 50-hour barrier without a solution and global tension mounts
l portacontenedores encallado Ever Given, uno de los mayores buques portacontenedores del mundo, tras encallar, en el Canal de Suez, Egipto 26 de marzo de 2021 PHOTO/REUTERS

PHOTO/REUTERS  -   The stranded container ship Ever Given, one of the world's largest container ships, after running aground in the Suez Canal, Egypt 26 March 2021

Saudi, Russian, Omani and US tankers are now sitting with more than 100 ships near the southern and northern entrances to Egypt's Suez Canal, waiting for the reopening of shipping movement within the canal after being hampered by the grounding of one of the world's largest container ships. Waiting for the Suez Canal to reopen is perhaps the best option for shipping lines, because sailing via the Cape of Good Hope route would increase the cost of the whole system.

Remolcadores egipcios intentando liberar el MV Ever Given (Evergreen), de propiedad taiwanesa, un buque de 400 metros de largo y 59 metros de ancho, que se encuentra atascado lateralmente e impide todo el tráfico a través de la vía navegable del Canal de Suez de Egipto PHOTO/CANAL SUEZ/AFP
PHOTO/CANAL SUEZ/AFP-Egyptian tugboats attempting to free the Taiwanese-owned MV Ever Given (Evergreen), a 400 metre long and 59 metre wide vessel, which is stuck sideways and impeding all traffic through Egypt's Suez Canal waterway.

However, the Egyptian authorities were forced to seek the help of foreign experts. At exactly five o'clock on Thursday morning Cairo time, a team of dredging and heavy lift experts from the Dutch company Boscalis arrived in Egypt to assist Suez Canal Authority experts in refurbishing the container tanker, a process that could take, according to company president Peter Berduusky, days or perhaps weeks. Egyptian officials add that, if efforts to resurface the ship were done incorrectly, it could take a week, but if done correctly, it should take no more than two days. Adding: "If the efforts to float the boat were done correctly from the beginning, the crisis could have ended yesterday".

Esta imagen de satélite de Cnes2021, Distribution Airbus DS, muestra el carguero MV Ever Given atascado en el Canal de Suez, cerca de Suez, Egipto, el jueves 25 de marzo de 2021.  PHOTO/ Cnes2021, Distribución Airbus DS vía AP
PHOTO/ Cnes2021, Distribución Airbus DS vía AP-This satellite image from Cnes2021, Distribution Airbus DS, shows the freighter MV Ever Given stuck in the Suez Canal near Suez, Egypt, Thursday, March 25, 2021.

Once the efforts to resurface the float are fully successful, it is unlikely that the EverGiven will be able to continue sailing normally due to the damage it may have sustained, as it will have to be towed to the nearest mooring, which will be either the port of Sokhna, located 20 kilometres south of Suez, or the port of Port Said, located 100 kilometres to the north. There, the tanker will be unloaded and undergo minor repairs. But if the damage is determined to be severe, it will be towed to the shipyard.

The canal is a major route through which oil flows from the Gulf region to Europe and North America. According to estimates by market research firm Kepler, the tankers now parked off the canal, plus those expected to arrive in the next few days, carry on board about 10 per cent of the world's oil consumption per day.

The three largest exporters of crude oil and petroleum products through the Suez Canal in 2021, according to Vortexa estimates, are Russia with 546,000 barrels per day, Saudi Arabia with 410,000 barrels per day, and Iraq, which exports about 400,000 barrels per day through the Egyptian canal. On the other hand, India tops the list of the largest importer of crude oil and petroleum products through the Suez Canal with 490,000 barrels per day, followed by China with 420,000 barrels per day, then South Korea with 380,000 barrels per day.

The three largest exporters of crude oil and petroleum products through the Suez Canal in 2021, according to Vortexa estimates, are Russia with 546,000 barrels per day, Saudi Arabia with 410,000 barrels per day, and Iraq, which exports about 400,000 barrels per day through the Egyptian canal. On the other hand, India tops the list of the largest importer of crude oil and petroleum products through the Suez Canal with 490,000 barrels per day, followed by China with 420,000 barrels per day, then South Korea with 380,000 barrels per day.

The extent to which these countries are affected by the current turmoil in the Suez Canal depends on the length of the canal's closure. Waiting for the Suez Canal to reopen is perhaps the best option for international shipping lines so far, given that sailing the "Road of Good Hope" increases the journey time from Asia to Europe by two weeks, which means higher material costs and further delays in delivery dates.

Foto de satélite que muestra el Canal de Suez, la zona en la que encalló el MV Ever Given y unos 300 buques inmovilizados en ambos accesos. AFP/AFP
AFP/AFP-Satellite photo showing the Suez Canal, the area where the MV Ever Given ran aground and some 300 vessels grounded at both approaches.

For China, this is a uniquely vulnerable situation. Unlike the United States, which is a net exporter of crude oil, China imports nearly three-quarters of the oil it consumes, as well as about four-fifths of the iron ore it uses to fuel its frenetic pace of infrastructure construction, not to mention most of the goods exports it uses to earn foreign exchange to pay for these commodities.

That makes it particularly vulnerable to maritime blockades. East Asia's geography means that the Straits of Malacca and Singapore, as well as the quasi-narrow straits through navigable stretches of the South China Sea and those separating Taiwan from the Philippines, Japan's Okinawa islands and mainland China are highly vulnerable to interdiction in the event of conflict.

Gráfico que ilustra las dimensiones del buque portacontenedores encallado MV Ever Given y el Canal de Suez, donde está atascado AFP/AFP
AFP/AFP-Graphic illustrating the dimensions of the stranded container ship MV Ever Given and the Suez Canal, where it is stuck.

Much of China's foreign policy over the last decade makes more sense as a way of overcoming these vulnerabilities. Chinese companies have stakes of close to 65 per cent in the world's busiest ports, according to Gavekal Dragonomics. An infrastructure corridor through Pakistan, pipelines through Myanmar and an intermodal rail route through the Malaysian peninsula, all key elements of President Xi Jinping's Belt and Road Initiative, serve to reduce China's reliance on the Straits of Malacca and Singapore. Asserting claims in the South China Sea similarly makes it harder for Southeast Asian neighbours and the United States to threaten trade. This is a good reason to take the Suez mishap seriously, even if disruptions to the world's supply chains are resolved after a few days.