SUEZ CITY, Egypt—A massive shipping vessel blocking the Suez Canal, one of the most important waterways in the world, is adding stress to the global supply chain.
CNBC reports that the stranded Ever Given mega-container vessel is costing $400 million an hour, per Lloyd’s List calculations, which also values westbound traffic at roughly $5.1 billion a day and eastbound traffic at about $4.5 billion a day.
Jon Gold, vice president of supply chain and customs policy for the National Retail Federation, told CNBC that the Suez Canal blockage is further stressing an already-strained supply chain.
“Every day that the vessel remains wedged across the canal adds delays to normal cargo flows,” Gold commented, adding that NRF members are working with carriers to determine the best mitigation strategies. “Many companies continue to struggle with supply chain congestion and delays stemming from the pandemic. There is no doubt the delays will ripple through the supply chain and cause additional challenges,” he said.
As of Friday morning, dredgers were attempting to remove hundreds of thousands of cubic feet of sand around the bow of the 1,300-foot Ever Given vessel to reach a water depth of about 50 feet so they could dislodge the ship, according to the Wall Street Journal. Shipping companies report more than 300 idled vessels on either side of the canal, and many shipowners and operators have decided to reroute, adding weeks to their voyages.
European and Asian businesses will likely feel the brunt of the shipping disruption, while U.S. importers could also feel an impact, notes the Journal. The Suez blockage “will drastically reduce global container shipping capacity and lead to further delays for American importers to get their orders delivered,” said Lars Jensen, chief executive of Sea Intelligence Consulting.
Jensen also told CNBC that the Suez Canal crisis comes at a time when the schedule reliability for container vessels is already in disarray due to the global pandemic. “Right now, two out of three container vessels arrive late,” he shared. While a two-day delay isn’t a major problem, “the longer this drags out, the worse it gets because you are then talking about effectively removing vessel capacity as well as containers at a point in time where they are already in short supply,” he said.
Meanwhile, one product could see another shortage not seen since the early onset of the global pandemic: toilet paper.
Brazilian-based Suzano SA, the biggest producer of wood pulp used for products like toilet paper, has indicated that the “global crunch in shipping containers could start creating supply snags,” according to Bloomberg. Walter Schalka, CEO of Suzano, told the news source that he is concerned that the shipping problems are going to get worse, and significant disruptions to the pulp trade could impact supplies of toilet paper if producers don’t have ample inventories.