The giant ship “Chang Chi” finally got out of trouble on March 29 and was towed out of the canal for further inspection.
This is one of the most serious cargo ship grounding and channel blocking accidents in the history of Suez Canal, some media called another “Suez crisis”, direct and indirect economic losses caused by the delayed voyage of cargo ships is estimated at hundreds of millions of dollars per hour.
Economic Losses
The Suez Canal, which connects the Red Sea and the Mediterranean Sea, was opened in 1869 and expanded in 2015 and is a hub of trade between Europe, Asia and Africa.
Merchant ships passing through the Suez Canal each day carry about 1 million barrels of Crude Oil and 8 percent of liquid natural gas, as well as commodities that account for at least 12 percent of global trade, including mainly clothing, furniture, industrial production parts and automotive components. The Wall Street Journal estimates the amount of stranded cargo at $12 billion.
Lloyd’s List, an international shipping industry publication, estimated the amount of stranded trade at $9.6 billion per day, equivalent to $400 million per hour/3.3 million tons of cargo, or $6.7 million per minute.
A week after the canal was blocked, some 370 tankers, cargo ships and other vessels were stranded at both ends of the canal, including at least 41 container cargo ships and 24 tankers.
The Suez Canal Authority (Suez Canal Authority) reopened an older section of the channel after the incident to divert some of the ships, but the channel can only pass shallow-draft, smaller ships. Even so, canal authorities estimate that canal operating revenues are reduced by about $14-15 million per day due to the blockage.
With more than $9 billion worth of cargo passing through the Suez Canal each day, the toll per ship is roughly hundreds of thousands of dollars based on the value of the cargo carried.
The impact of the Suez Canal blockage will also ripple through the Egyptian economy. According to credit rating agency Moody’s, 2 percent of Egypt’s gross national product (GDP) before the New crown outbreak came from the Suez Canal. the canal contributed more than $5.6 billion to the Egyptian economy during the 2020 outbreak.
World insurance giant Allianz estimates the canal blockage caused about $6 billion to $10 billion in weekly losses to global trade, a 0.2-0.4 percentage point reduction in annual growth.
The Wall Street Journal cited data from shipping brokerage firm Braemar ACM showing that freighter rates on the Asia to Middle East shipping route jumped 47 percent after the accident.
International Chamber of Shipping (ICS) Secretary General Guy Platten said in an interview with the BBC that some shipping companies have started to divert cargo ships around the Cape of Good Hope in Africa, which means an increase of at least 3,500 miles and 8-12 days in voyage Time.
The “Chang Chi” was supposed to arrive at the British port of Felixstowe in early April to unload dozens of containers from the Far East, but now the arrival date is uncertain.
If the Suez Canal continues to be blocked for another week, buyers of the “Longchamp” shipments may be forced to reorder and use air freight, increasing costs by at least three times.
The blockage of the Suez Canal will have a significant impact on the global supply chain, and it is likely that consumers will pay for it.
The “Eurasian artery”
Located in Egypt, the Suez Canal connects the Red Sea and the Mediterranean Sea and is strategically located, with a total length of over 193 kilometers and heavy traffic.
After several expansions, the Suez Canal is now 205 meters wide, 24 meters deep and 193 meters long, divided into three sections: the southern, northern and central sections. The middle section has a parallel channel completed in 2015, known as the “New Suez Canal”, which allows ships to pass in both directions.
The canal is currently owned and managed by the Egyptian government’s Suez Canal Authority, and nearly 20,000 ships will pass through the Suez Canal in 2020.
The history of the canal dates back as far as 1878-1840 B.C. in ancient Egypt, when Pharaoh Senusret III ordered the digging of a waterway linking the Red Sea and the Nile. Thousands of years later, when the Ottoman Empire ruled Egypt in the mid-19th century, it allowed the French to rebuild the canal and open up the Eurasian route. It took 11 years from the beginning of construction in 1858 to its completion in 1869.
The Suez Canal was closed several times before the “Long Give” blocked the channel due to wars over ownership and control of the canal.
The Convention of Constantinople of 1888 established the canal as a neutral zone under the protection of the British Empire, open to commercial and military vessels of any nation in times of peace and war, and the Anglo-Egyptian Treaty of 1936 retained control of the canal for the British, the sovereign power of Egypt.
In 1956, the Egyptian government declared the Suez Canal nationalized, the British, French and Israel invaded Egypt, and the Second Middle East War broke out, known as the Suez Crisis, which resulted in the destruction of the canal and the sinking of ships that blocked the waterway. After the war, Egypt gained full sovereignty over the canal.
When the Third Middle East War broke out in 1967, the Suez Canal was closed again and reopened after an eight-year ban on navigation.
When the Yom Kippur War broke out in 1973, Egypt and Israel fought a tug-of-war on both sides of the canal, and finally UN peacekeeping forces were stationed in the Sinai Peninsula, and the Suez Canal was reopened to navigation in 1975.
The bow and stern of this cargo ship got stuck in the embankment on both sides of the canal, and the bottom of the ship ran aground in the riverbed. Ten tugboats were involved in the rescue and managed to get the head and stern of the stuck cargo ship off the embankment and the ship regained freedom of movement.
The river around the stranded cargo ship needed to be dredged, and the sand and silt next to the ship needed to be removed.
Peter Berdowski, CEO of Boskalis, the Dutch river dredging engineering company that took over this part of the operation, explained that the almost fully loaded cargo ship was heavy and required a multi-pronged approach of dredging, towing and offloading to reduce weight before it could get out of the situation.
An excavator on one side of the shore clears sand and mud from around the ship’s bow, March 25 Image source, REUTERS
Unloading cargo and fuel to reduce the weight of the ship and bring it up to the surface will help tow the giant ship out of the channel. The risks of this phase include the possibility of damage and also the possibility of the cargo ship losing balance, which is difficult and time-consuming to operate.
Waterborne cranes are required, as well as calculations of the dynamic balance and stability of the cargo ship. In case of error, the worst case scenario that may occur is the breakage of the vessel due to load imbalance.
Unloading the fuel from the cargo ship is relatively easy, but not very useful for overall load shedding.
Cause of the Accident
The Chang Chi was built in 2018, registered in Panama, owned by Japan’s Shoei Kisen Kaisha Ltd. and operated by Taiwan‘s Evergreen, is 400 meters long, 59 meters wide, can carry 20,000 containers and has a displacement of about 220,000 tons, making it one of the largest maritime vessels available.
There are several accounts of the cause of the accident. Some believe it was a technical fault or operational error, and the most widely known version is that the Chang Chi was on its way from China to the Dutch port of Rotterdam on March 23 when it encountered strong winds and a sandstorm while passing through the Suez Canal, and the ship deviated from its course, hit bottom and ran aground, getting stuck across the northbound channel.
Another theory is that the huge ship was too large, which was a major factor in the grounding.
At the time of the incident, the Chang Chi ship was carrying more than 18,000 containers, and there is speculation that it was not suitable for passage through the canal.
The cause of the grounding remains inconclusive.
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