The TLDR: A cargo ship is wedged in between the world’s busiest—and one of the narrowest shipping routes, causing a massive traffic jam. It is triggering widespread anxiety about shipping delays and, worse, soaring oil prices. We explain why a ship called Ever Given is giving everyone a massive headache.

First, a quick geography lesson

• The 120 mile-long canal separates Africa from Asia—and connects the Mediterranean Sea with the Red Sea. What’s important to note: It is only 205 metres wide.
• The original canal was dug back in 1850 B.C. when pharaohs ruled the roost in Egypt. The modern version was built in the 1860s by a French company—over the objections of the British Empire.
• It was privately owned until 1956, when Egypt nationalized the canal—triggering a war with Britain and France and Israel. The canal was shut down for six months.
• And it is owned and run by the government to this day—earning the country $5.61 billion in revenues in 2020.

Why Suez matters: The canal accounts for around 30% of the world’s cargo shipping traffic each day. Nearly 19,000 ships—which is an average of 51.5 ships per day, with a net tonnage of 1.17 billion tonnes—passed through the canal during 2020. And that’s a pandemic year! If the canal shuts down, the only other way to move ships between Asia and Europe is to go around Africa—which will add 7 days to the journey.

Also this: 90% of all of the world’s goods are transported on ships!  

The big crash

The ship: The Ever Given is operated by Evergreen Marine Corp, a major Taiwan-based shipping company. It was on its way from China to Rotterdam, Netherlands. And it’s massive! The fully laden ship weighs around 220,000 tons and is 400-metres long! For comparison: The Empire State Building is 443 metres tall. Point to note: The Ever Given is one of a new category of ships called ultra-large container ships (ULCS), some of which are even too big for the Panama canal.

The accident: According to the Suez Canal Authority (SCA), Ever Given lost the ability to steer due to high winds and poor visibility caused by a dust storm. Experts told The Guardian:

“The accident was probably due in part to strong winds that turned the containers above deck into a vast sail that blew the vessel off course, said Jamil Sayegh, a former captain and maritime law specialist with experience navigating the canal. ‘The force generated by the wind would have unintentionally altered the heading of the vessel,’ he said.”

Not being ruled out: Human error since none of the other ships in the canal had the same problem. A relevant point to note here: 

“Tuesday marked the second major crash involving the Ever Given in recent years. In 2019, the cargo ship ran into a small ferry moored on the Elbe river in the German port city of Hamburg. Authorities at the time blamed strong wind for the collision, which severely damaged the ferry.”

Also a factor: There is a big financial incentive to just push ships through the canal—despite poor weather conditions:

“‘If you delay this vessel at Suez anchorage, it means you are making the shipowner lose $60,000 per day or $3-4,000 per hour of delay,’ said Sayegh, the Beirut agent for the shipping journal Lloyd’s…

 

Analysts said the incentive not to pause journeys had grown more acute with the rise of just-in-time supply chains. ‘For decades shipping has been the invisible conveyer belt at sea, enabling large manufacturing industries like automotive to do just-in-time shipments, even though from time to time shippers are calling foul in terms of the reliability of the schedule,’ said the shipping analyst Sand.”

The really ‘penis’ bit: is the strange route taken by the ship just before it ran aground. VesselFinder website put up a clip charting the same:

And now, many are convinced that the captain was trying to, er, channel his artistic self:

The big result

The ship is literally wedged across the canal—with its bow touching the eastern wall, while its stern is lodged against the western side. It looks like this:

And the traffic jam it’s caused—with more than 100 cargo ships now stranded in the canal—looks like this:

Here’s a satellite view:

The big rescue effort

Tugboats and dredgers are racing to free Ever Given. The head of the Suez Canal Authority vowed, “The Suez Canal will not spare any efforts to ensure the restoration of navigation and to serve the movement of global trade.”

But, but, but: A lot depends on execution. An Egyptian official told CNN that while they have the equipment to float a ship, it depends on how it is used: 

“If the method is not correct it might take a week, and if it's done well it might take two days. But if it had been correct [in the first place], then the crisis could have ended yesterday,"

And if the tugboats are unable to move the ship, part of its cargo may have to be removed using a crane barge to lighten the vessel, and “this can take days, maybe weeks”.

As of now: The 24-hour operation appears to have produced little result. Ever Given is “still ever-so stuck”:

The big fallout

Maritime experts told the New York Times: it “could not happen in a worse place,” he said, “and the timing’s pretty bad, too.” And here’s why:

One: Within hours of the blockage, about 10 million barrels of crude and petroleum product shipments were backed up near the north and south entrances. Also this: “The vessels caught in the bottleneck or expected to arrive there in the coming days include oil tankers carrying about one-tenth of a day’s total global oil consumption.” And the effect was immediate: Crude oil prices jumped 2.85% to $62.52 a barrel. This is especially bad news for Indians who have been reeling from rising petrol prices—and just got a small reprieve (17 paise) from the never ending spike. 

The good news: given that the pandemic has depressed demand for oil, this is expected to be temporary.

Two: The global supply chain for goods is already under severe stress due to the pandemic. This will create knock-on delays as ships stand idle, and again when they arrive in a rush at ports—once the Ever Given is moved out of the way. According to one financial analyst:

“We’ve never seen anything like this before but it’s likely that resulting congestion will take several days to weeks to clear. It is expected to have a ripple effect on the other convoys, schedules and global markets.”

Reading list

Associated Press and The Guardian have the most on the accident. CNN has details on Ever Given-and what will happen to it once it is extricated. Al Jazeera looks at the effect on oil prices. New York Times has background on the pressure on global shipping.