The Current

Ship stranded in Suez Canal could have 'massive ramifications' for global supply chain: historian

A massive cargo ship remains stuck in the Suez Canal, stranding other ships on either side of the vital trade route. We discuss the impact on the global supply chain with Sal Mercogliano, a maritime historian and associate professor of history at Campbell University in North Carolina.

'This is going to have massive ramifications,' says maritime historian Sal Mercogliano

The cargo ship MV Ever Given sits with its bow stuck into the wall after it became wedged across Egypt’s Suez Canal and blocked all traffic in the vital waterway. (Suez Canal Authority via AP)

The Suez Canal has only been closed for a few days so far, but a maritime historian warned that the blockage could have massive economic impacts around the world

"You could see the potential for an economic recession, much the same way we saw in early 2020," explained Sal Mercogliano, who is also an associate professor of history at Campbell University in North Carolina.

The MV Ever Given, a Panama-flagged ship that carries cargo between Asia and Europe, ran aground Tuesday in the narrow, man-made canal dividing continental Africa from the Sinai Peninsula. While crews scramble to free the vessel, the dozens of ships that usually traverse the canal daily are stuck in limbo. 

"I'm not going to send vessels if I'm a shipper.… I'm going to start detouring them 3,000 to 4,000 miles around Africa and adding 12 to 14 days on my voyage," Mercogliano told The Current's Matt Galloway.

Mercogliano told Galloway those extra days could lead to further delays at ports in Europe causing shortages in goods. Here's part of their conversation.

Just briefly, take me to the Suez Canal. You have been through the canal. What is it like?

It is a very long day for the crew on board. Start off very early in the morning. You set sail into the canal with at least two embarked Egyptian pilots on board — Suez Canal pilots. And it's fairly routine. It's narrow at times and very narrow where the Ever Given is.

So it's a really long day passage, but absolutely essential for world trade. 12 per cent of the world's trade goes through that artery. And what you're seeing right now is a blockage of one of the key maritime choke points in the world. 

The statistic is 90 per cent of everything that we use travels by ship. Given the fact that that passageway is blocked, how serious of an issue is this?

I can't tell you ... how serious this is. The Ever Given is, you know, approximately 400 metres long — you know, 1,300 feet. She's an ultra-large container ship, one of these new brand of container ships designed to carry over 20,000 containers. And she has gone across the channel.

She's literally longer than the Suez Canal is wide where she's at. So her bow is planted in Asia and her stern is resting on Africa and she's hanging there across the channel. 

What you're seeing right now is the pile up of vessels. Roughly about 50 vessels go through the canal every day. So we're seeing about 175 vessels after three days sitting there. Lloyd's List in London estimates about nine billion dollars' worth of goods go through the canal on a daily basis. 

We see, at least right now, 10 tankers sitting off the anchorages with about 13 million barrels of oil trying to get to Europe. This is going to have massive ramifications. 

There was an attempt to get her off last night at high tide in the canal; it failed. And now they're removing the vessels that were behind her in the canal, which tells me that the salvage is going to be a long-term prospect.

This satellite image shows the Ever Given stuck in the Suez Canal on Thursday, March 25. (Cnes2021, Distribution Airbus DS via AP)

How are they trying to move this ship?

They initially tried to move her with local tugs. These are… tugs used for docking and manoeuvring in the anchorages. They're not large tugs. And so they had hoped to be able to pull her stern off when she went ashore. But she hit the eastern bank at about 13 knots, actually cracked the concrete; the sides of the Suez Canal in that area is concrete. And she actually burst into the side. 

The high tide was not enough to get her off. And so now they have brought in a salvage outfit out of the Netherlands called Smit. Smit is the top-line absolute — the elite force when it comes to salvage operations. But you have to be very careful about this. With the ends of the vessel ashore and the centre afloat, you have to be careful not to take too much off of her at too fast of a rate.

The worst scenario here is she cracks her hull [and then] we start getting oil leaking into the canal. But worse, you have a catastrophic break of the vessel, which would close a canal for months.

You mentioned the tanker ships with oil on them. What is not being moved around the world right now?

Well, I mean, all the consumer goods that were destined for Europe are not getting there now. There may be medical supplies, test kits for COVID that aren't moving right now. There may be parts for auto manufacturers that are not moving. And you may see, you know, assembly lines in Germany and Netherlands closed down because of this. The fuel not going, is going to see fuel prices spike again in Europe. They're already high to begin with. You'll see that happen again. 

Basically what you're seeing is a repeat of what we saw in early 2020 when COVID hit when all of a sudden we had shortages.... That's what you're about to see happen again, especially in Europe.

Nearly a dozen tugboats worked together to try to nudge the obstruction out of the way as ships hoping to enter the waterway began lining up in the Mediterranean and Red Seas. (Suez Canal Authority/Reuters)

You said that if they can't move her by the end of this month, that'll be a problem. What does that mean? I mean, this seems like a problem. What's the bigger problem?

Well, the bigger problem is the tide starts going down. You don't have as much water in the canal. And if it goes more than a week, you know, the end of the month, basically, then they're going to start rerouting vessels. And so what you're going to have is ... almost a three-week gap, at that point, of movement of goods. 

This is exactly what we saw in early 2020 when China shut down and goods stopped moving out of China. So you could see the potential for an economic recession, much the same way we saw in early 2020. 

Ports are not at full capacity in Europe because of COVID. They don't have enough working crews in the ports. The inland transportation system is not at full capacity. And if all of a sudden they're inundated with a flood of vessels in a few weeks now, that's going to be a big difficulty. 

We see it right now off the coast of Vancouver, in the United States off the West Coast and East Coast, with ships lined up trying to get into the ports. And they can't do it. They'll be magnified in Europe.

Written by Lito Howse with files from CBC News. Produced by Samira Mohyeddin. Q&A edited for length and clarity.

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