Suez Canal blocked European and American retailers in trouble

   IKEA confirmed that the container ship carrying the product stranded a number of electrical appliances and household products retailers confirmed the delayed delivery of the goods

  As one of the world's important shipping channels, the blockage of the Suez Canal has added new worries to the already tight global container ship capacity.

Some European and American retailers worry that the blockage of the canal will affect the global supply chain, which may make it even more difficult for companies to ensure stable inventory during the new crown epidemic.

Shipping market

  The supply of capacity has worsened, and the freight rates of Asia-Europe routes have been increased

  On the 23rd, a heavy cargo ship flying the Panamanian flag ran aground on the new channel of the Suez Canal, causing a blockage of the channel.

The Suez Canal connects the Mediterranean Sea and the Red Sea. It is located at the key point of the intercontinental belt of Europe, Asia and Africa. About 12% of world trade is transported through this canal.

  According to media reports, about 200 vessels have been blocked since the cargo ship ran aground.

Analysts believe that if the canal cannot be opened as soon as possible, it may have a major impact on the global shipping market, adding "new worries" to the shipping industry that is already facing tight capacity.

  Zhang Longxing, director of the oil business department of the Shanghai Petroleum and Natural Gas Trading Center, who has been engaged in energy industry research for a long time, introduced that currently about 25% of the world's container trade is completed through the Suez Canal.

Zhang Longxing said that after the Suez Canal is blocked, the arrival time of ships may be greatly delayed.

In the short term, the world's highly tight container ship capacity supply will worsen the situation, which will further increase the freight rates of Asia-Europe routes.

  JPMorgan Chase released a report on the 25th that if a cargo ship stranded cannot be resolved quickly and properly, there may be a risk of breaking the ship. Once this happens, the canal is expected to be blocked for a period of time.

The suspension will further disrupt the global container ship supply chain, and may severely impact international trade, leading to soaring freight rates and rising global inflation.

  According to Agence France-Presse, global shipping giants Maersk and Hapag-Lloyd said that they are closely monitoring the development of the situation and are discussing transportation options to avoid the Suez Canal, or choose to detour the Cape of Good Hope.

Company voice

  IKEA: adversely affecting the supply chain

  The world's largest home furnishings retailer, the Swedish chain IKEA, confirmed that about 110 containers containing IKEA products were on board the stranded cargo ship.

IKEA is investigating the number of containers with IKEA products on other blocked cargo ships.

  IKEA spokesman Hanna Maud said: "The adverse impact of this incident on our supply chain depends on the progress of the rescue operation and the time it takes."

  British electrical retailer Dixons Mobile Company and Dutch home furnishing retailer Brocker Company also confirmed that the delivery of goods was delayed due to the blockage of the canal.

  Many countries have implemented "home orders" during the new crown epidemic to stimulate people to upgrade their home furnishing products, and sales of TVs, sofas and other home appliances and furniture have increased.

  The British "Lloyd Ship Daily" estimates that container cargo worth approximately US$9.6 billion passes through the Suez Canal every day, including training equipment, clothing, household appliances and electronic products.

According to global shipping experts, thousands of empty containers return to factories in Asia via the Suez Canal every day.

  Richard Roach, chairman of a subcommittee of the National Association of Customs and Transportation Industry of the United States, said: "This is a catastrophic event in a tight market (capacity). Previously, high demand has caused congestion delays in the delivery of goods. Imported goods could not reach the shelves in time."

  Oliver Chapman, CEO of OCI Group Co., Ltd., which is engaged in global supply chain cooperation, said that rail freight from Asia to Europe has been "overloaded," while air freight is too expensive.

Take rubber gloves as an example. It costs US$2 to US$3 to ship a box of rubber gloves by air to Europe, which is a substantial increase compared to the 25 cents required by sea.

International oil prices

  Obstructed for more than two weeks, oil prices will continue to rise

  The slow rescue process of the Suez Canal stranded freighter caused market investors to worry. International crude oil futures prices continued to fluctuate upward on the 26th and rose significantly at the close.

  As of the close of the day, the price of light crude oil futures for May delivery on the New York Mercantile Exchange rose by US$2.41 to close at US$60.97 per barrel, an increase of 4.12%; the price of London Brent crude oil futures for May delivery rose by US$2.62 , Closed at 64.57 US dollars per barrel, an increase of 4.23%.

  American Price Futures Group senior market analyst Phil Flynn said on the same day that it may take several weeks for a stranded freighter to get out of trouble, and the market has become more concerned about supply chain disruption.

Flynn said that once the canal is blocked for more than two weeks, it will have a substantial impact on the supply and demand of the crude oil market and cause oil prices to continue to rise.

  However, some analysts said that although the Suez Canal is blocked and the market is concerned about crude oil supply, the new wave of new crown epidemics in Europe and other parts of the world may slow the recovery of global crude oil demand and limit the increase in oil prices.

This group of articles/Xinhua News Agency


  The rescue plan has three Turkey taking the opportunity to "show good"

  The chairman of the Egyptian Suez Canal Authority, Usama Rabie, recently issued a statement saying that the rescue of the cargo ship "Longci", which was stranded in the Suez Canal, is still continuing and that the canal has been suspended.

A person from a rescue company said that the rescue may take several weeks.

  According to Egyptian media reports and relevant analysis, there are currently three major rescue plans.

  One is towing by a tug with strong traction.

The Egyptian Pyramids online website quoted maritime expert Mahmoud as reporting that this is also the main method currently adopted for rescue.

  Second, clean up the sand in the stranded area.

Experts said that this plan is to deploy excavators to remove sand and mud under the bow while ensuring that the hull does not move.

  Third, reduce the weight of agrounded cargo ships.

Some experts said that the worst case is to unload a part of the container to reduce the weight of the "Changci".

If the first two programs do not make progress, this program will be considered.

  It is also reported that Turkey intends to send a tug to Egypt to help the Suez Canal shipping return to normal.

Turkish Transport Minister Adil Karaismailoglu told a reporter from the Turkish private TV station NTV on the 26th that the Turkish side has expressed its willingness to assist the Egyptian side. Once it receives a "positive response" from the other side, the tugboat will start operations.

  Karaismailoglu said that the Turkish side is ready for assistance, but has not received a reply from the Egyptian side for the time being.

  Several Turkish government officials said earlier in March that Turkey has resumed diplomatic contacts with Egypt and is seeking further cooperation with Egypt.

Egyptian Foreign Minister Sameh Shukeri confirmed on the 14th that the two sides have begun contact, but warned that whether the two sides can fully restore diplomatic relations depends on the substantial change in Turkish policy.

  Egypt and Turkey disagree on a number of international issues, including the conflict in Libya and the ownership of oil and gas resources in the Eastern Mediterranean.