With the continued suspension of navigation in the Suez Canal and the accumulation of ships inside the shipping lane of the canal, questions began to arise about alternative routes to the Suez Canal, in light of fears that trade supplies would be affected by the crisis, whether oil, gas, or agricultural and industrial products.
About 30% of the world’s shipping containers pass daily through the Suez Canal, and about 12% of world trade through the Suez Canal, Which connects the Mediterranean Sea to the Red Sea, and provides the shortest maritime link between Asia and Europe.
On average, about 50 ships pass daily along the canal, although the number may be much higher at times, and the Suez Canal route is especially important as an oil and LNG route, as it allows shipments from the Middle East to reach Europe.
According to a Bloomberg report it appears approximation The cost of the canal blockage is about $ 400 million an hour, based on calculations from Lloyd’s List that westbound traffic is worth about $ 5.1 billion per day, and eastbound traffic is roughly $ 4.5 billion.
The Egyptian authorities concerned said they were trying to restore balance to the ship, and local sources said that efforts might shift towards digging around the ship if the tugboats were unable to launch them.
Overcrowding of oil and gas tankers
Shipping sources said that dozens of ships carrying crude, liquefied natural gas and retail goods were unable to sail through the canal on Wednesday, which could disrupt supplies to global markets.
Seven LNG carriers are located near the entrances to the canal, according to vessel tracking data collected by Bloomberg.
Reuters quoted local sources as saying that there are at least 30 ships blocked north of the Evergiven and three in the south, while the Energy Information Agency said Kpler Over 20 oil tankers carrying crude and refined products have been affected by the congestion.
There may be one LNG tanker stuck inside the Suez Canal behind the stranded Evergiven, but there are already signs that the blockage is starting to disrupt global LNG flows, according to the agency. Bloomberg American.
Reuters reported that fears that the embargo would restrict crude oil shipments led to a 4% rise in prices in international markets on Wednesday.
If the congestion continues until the end of this week, it will affect the transit of 15 LNG tankers, Rebecca Shea said.
A disaster if the crisis continues for another five days
While it is likely to remain The Evergreen ship is stuck for only a few days, However, that would be long enough to propel some streams of energy.
Nils Madsen, vice president of products and operations at Incorporated Sea-Intelligence Based in Denmark, “If the Suez Canal remains closed for another 3-5 days, this will start to have very serious global repercussions.”
Revealed Peter Berdowski, CEO of the Dutch company Boscalis Which is trying to float the ship that has been stuck in the Egyptian Suez Canal for days, Thursday, March 25, 2021, that it is too early to determine how long the mission may take.
“We cannot rule out that it might take weeks … depending on the situation,” Berdowski told a Dutch television program, adding that the bow and stern of the ship had been raised on both sides of the channel.
The blockage of the Suez Canal by a giant container ship is likely to cause a wave of disruption across the global energy supply chain.
You may have European and American refiners Which depends on the vital waterway for Middle East oil shipments to search for alternative supplies in case the blockage continues, which could lead to an increase in the prices of alternative grades.
At the same time, crude oil flows from the North Sea fields bound for Asia will stop, because the canal is a critical route, and it is mainly used to transport crude oil from the Middle East to Europe and the United States, as well as to ship fuel oil from west to east.
Alternative routes to the Suez Canal
Suez Canal, Which is an artificial waterway with a length of 193 km that connects the Red Sea with the Mediterranean, thus linking trade between Asia and East Africa on the one hand, and between Europe, the Americas and West Africa.
As for the alternative routes to the Suez Canal, there are only two alternative sea routes, namely the Cape of Good Hope Road and the Arctic Road.
There is a third route, which is a route across the Pacific Ocean, but it is much longer. It is practical for trade between the West of the Americas and East Asia, and therefore it is not a competitor to the Suez Canal.
And there could be roads that combine land and sea, by transporting the unloading of goods transported by sea to ports and transporting them by land to other ports to be shipped back by sea, which is costly.
The paradox is that the closest road that combines land and sea transport is also through Egypt, such as the Suez Canal, where goods can be unloaded at Damietta or Port Said ports and transported by land to Suez and vice versa, to be transported by sea to their various destinations.
Cape of Good Hope … the natural competitor to the Suez Canal
The “Cape of Good Hope” route is a sea route linking Asia and Africa by circling Africa from its southern end, and merchant ships heading to and from Asia used to pass through it before digging the Suez Canal.
The Cape of Good Hope is about 3,000 nautical miles longer and takes longer, for an average of 5 to 15 days, depending on the ship’s starting point and destination.
This results in more fuel being used.
In times when oil prices are low, the cost of some trips with it reaches up to 200 thousand dollars, but the fees for crossing the Suez Canal still range between 400 thousand to 500 thousand dollars, and this makes the Ras Al-Raja Saleh road more economical, as It happened when oil prices plummeted in the mid-2020s, according to the CMA-CGM Shipping Alliance.
But with oil prices recovering part of their recovery, the Cape of Good Hope route may be more expensive for ships, according to a report by “BBC“.
But in the timing of normal oil prices, the cost difference between the Suez Canal and the Cape of Good Hope is about $ 500,000 For a voyage from the Saudi port of Ras Tanura to the Dutch port of Rotterdam, for a VLCC class oil tanker..
It must be borne in mind that the additional cost of the Cape of Good Hope Road is not limited to fuel and time, but rather the ship’s depreciation, which is reflected in its rent as well as the wages of sailors, and there is also the reality of additional security risks from some areas of the road, especially with Piracy increased in the Gulf of Guinea, West Africa.
But the cost difference between the two routes is diminished if the journey is between a port in Far East Asia with another in the Americas.
In the current crisis, the cost of the Cape of Good Hope Road increases for the ships stuck in the Mediterranean and Red Bahrain due to the closure of the Suez Canal, because these ships will make a double journey because they have to return from the Mediterranean and Red Bahrain to the south, towards the Cape of Good Hope, then go to their destination. But such an expensive trip might be necessary if the Suez Canal continues to be closed.
As for the ships that will start moving from their original destination, the losses may be less, because they will begin to identify the Cape of Good Hope as a corridor for their voyage from the start.
Indeed, at least one shipment of LNG from the United States may have diverted toward the Cape of Good Hope and away from Suez, Bloomberg quoted Lucas Schmidt, an analyst at Wood Dakansee Ltd., in a note on Thursday.
Russia took advantage of the crisis to highlight the benefits of sailing the Northern Sea Route between Asia and Europe, which Russia has been promoting for some time as an alternative to the Suez Canal, especially for trade between the northern parts of Europe and North America with the Far East.
The Russian State Nuclear Energy Corporation has been deployed in Moscow. “RosatomOn Thursday morning, several tweets listed the preferred reasons for considering international shipping to go north as an alternative to the Suez Canal.
In 2018, the Russian government appointed Rosatom to be in charge of the North Sea through an ad hoc administration, with Rosatom’s fleet of nuclear-powered icebreakers.
As the Arctic is melting rapidly, the traffic of sailing ships crossing northern Russia increases from year to year. As “Rosatom” works (Rosatom ) To significantly enhance its ability to keep the North Sea Route open for shipping by building new, more powerful icebreakers.
For Moscow, Arctic shipping is a key to industrial development in the far north of Siberia, and is believed to play an important role in the country’s future economy.
Sailing the North Sea Route is about 40% shorter from China to European ports, compared to sailing the Suez Canal.
In spite of this, the traffic in the north was very little, and by no means a competitor to Suez or sailing around Africa.
The ice in the Arctic Ocean is relatively thin this winter, so tankers and LNG carriers often travel without an icebreaker escort. Rosatom provides real-time data on weather, currents, ice movement and other important information for traveling north.
In the middle of winter, the Northern Sea Route provides escort for breaking the ice, and Rosatom rescued the cargo ship “Sparta III” with the nuclear powered icebreaker “Vaygach”, after getting stuck in the ice in late December 2020.
But it was not possible to access press reports about ships changing their course from the Suez Canal to the Arctic Road. The reason may be that this road, unlike the Cape of Good Hope, needs special equipment regarding ships and their crews in very cold weather, especially since the winter has not left Area after.