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One of the largest container ships in the world has run aground in the Suez Canal, blocking the waterway and leading to a slowdown in global trade and a rise in oil prices. Mint explains the development at one of the busiest shipping canals in the world.

How can one ship block the Suez Canal?

The Ever Given is no ordinary ship. It’s about 100 metres longer than the Eiffel Tower is high and almost double the height of the Statue of Unity. A sudden gust of wind reportedly knocked the 1,300-foot ship—among the largest container ships in the world—off course and ran it aground. The grounded ship blocked others that were behind it, including five liquefied natural gas (LNG) tankers, three of which were bound for Asia. The ship ran aground at 5.30pm India time on Tuesday, while travelling from the Red Sea to the Mediterranean, carrying cargo for the Netherlands.

Why is the Suez Canal important?

The Suez Canal is among the most important waterways in the world, and it links the Mediterranean with the Red Sea and shipping lanes to Asia. The canal is 190 kilometres long and 205 metres wide. The canal’s importance in global trade led the Egyptian government to order its expansion in 2014. At the time, President Abdel Fatah al-Sisi called the expansion “a gift to the world". In fact, Sisi had recently asked Egyptian officials to come up with a “flexible marketing strategy" to increase traffic on the canal, which would help the country overcome the covid-19 pandemic.

Key maritime trade route
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Key maritime trade route

What kind of traffic does the canal draw every day?

According to reports, nearly 50 ships pass through it every day, and it accounts for 12% of world trade. Egyptian government data shows that container ships accounted for nearly 50% of the total cargo tonnage that passed through the canal in February. Almost 19,000 ships used it in 2020, with a net tonnage of 1.17 billion—the second highest load in its history.

How did the blockage affect world trade?

Delays in global trade started hours after the incident, as over 10 million barrels of oil was stuck behind the Ever Given. Oil prices rose by 2% in the wake of the blockage, and some expected the impact to grow if the issue wasn’t resolved swiftly. The canal is also the largest transit route for oil coming from Russia to Asia, and facilitates the flow of crude from West Asia to Europe and North America. Prices had dropped to below $60 again on Wednesday as investors reassessed the impact of the blockage.

Has the issue been resolved now?

No. Dozens of ships were still stuck behind the Ever Given at the time of writing. Egypt had reopened an older channel in the canal in order to divert some of the traffic and take control of the situation. Reports said there were at least 30 ships blocked to the North of Ever Given and three ships to its South. Bernhard Schulte Shipmanagement, which manages the container ship in question, had issued a statement saying its priority was to “safely re-float" the vessel and for “marine traffic in the Suez Canal to safely resume".

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