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Suez Canal blockage continues to disrupt global trade, hitting supply chains

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LONDON / LOS ANGELES – A backlog of container ships carrying consumer goods has grown at some key strategic ports after a weeklong blockage in the Suez Canal, adding to continued disruption in global trade, sources say. sector.

Dozens of container ships were stranded when the 400-meter (430-yard) Ever Given ran aground in the canal on March 23, as specialist rescue teams took nearly a week to free the ship.

The suspension of crossings on the waterway left shipping companies – including container lines – with millions of dollars in additional costs, which were not covered by insurance.

“The blockade of the Suez Canal will increase the negative impact on global supply chains in the coming weeks, as the availability of empty equipment, especially in Asia and Europe, will be affected,” Reiner Heiken, Managing Director of Hellmann Worldwide Logistics in the United States. , told Reuters.

Container carriers, which transport products ranging from mobile phones to designer items, have struggled for months with disruption caused by the coronavirus pandemic and a surge in demand for retail products that has led to Wider logistics bottlenecks, including in the primary US consumer market.

While some freight carriers have turned to rail, this option has barely made a dent as around 90% of world trade is carried by sea.

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European and US retailers have warned of possible supply issues due to the impact of Suez.

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Port officials at Europe’s main gateways say the impact will be felt in the coming days, adding already stretched supply lines.

Barbara Janssens, from the port of Antwerp, said port and terminal operators “are already preparing for what lies ahead”.

“The impact on global supply chains is expected to last for several months. There is simply not enough capacity available in the global container ship fleet to help counter the worst effects of the Suez incident, ”Janssens said.

Leon Willems, of the Port of Rotterdam, said he expected his container traffic to be around 10% above normal every day in the coming weeks.

“The port and container terminals are doing everything they can to minimize disruption,” said Willems.

Maersk, the world’s leading container line, said in a customer note that ships held up at Suez would be delayed for several days before reaching ports on the US east coast.

In an unusual move, the company urged ports “to take this opportunity to clear cargo from the terminals, which will allow them to operate more efficiently.”

The east coast port of Newark did not immediately respond to a request for comment.

A source from the Port of Savannah in the southern United States said it plans to clear a backlog of ships in the coming days.

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Long waiting times

As US east coast ports are more prone to Suez Canal disruptions, surging demand for retail products has overwhelmed West Coast terminals in recent months.

Container ships face longer waiting and unloading times at West Coast ports than in many other ports around the world, according to an analysis of the Logistics Platform Project44.

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Eugene Seroka, executive director of the Port of Los Angeles, said he was making progress in reducing the backlog, which could be cleared by the end of May or early June.

Mario Cordero, executive director of the nearby port of Long Beach, also expected his backlog to be reduced by the summer.

“But for at least the next two months, we expect a continued increase in volume that we are seeing.” Cordero said.

German container line Hapag-Lloyd said the blockage of the Suez Canal was having a major effect on a number of their services.

“We are trying to recover from this crisis,” Hapag Managing Director Rolf Habben Jansen told a virtual press conference on Thursday.

“We are working hard to try to get back to normal around the start of the third trimester.”

Sea-Intelligence analysts expected a ripple effect in the coming weeks between Asia and Europe and a disruption in container trade.

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The Hong Kong Transportation and Housing Bureau said the government was monitoring the situation although the disruption did not have a significant impact on shipping operations between Europe and Hong Kong.

Elsewhere, carriers have turned to rail links between China and Europe to bring essential supplies, although users have pointed out that volumes are still low.

Travel times via rail routes, which run from China to Kazakhstan or Mongolia to Russia and then to freight centers across Europe, typically take between 16 and 18 days, compared to four weeks by sea and a little less than a week by plane.

Danish freight forwarder DSV, Dutch freight management company GVT and Maersk have all said they see renewed interest in rail freight between Europe and Asia.

“Ground transport between Asia and Europe will still only be able to cover a small part of the total transport volume,” Hellmann’s Heiken said.

(Additional reporting by Nikolaj Skydsgaard in Copenhagen, Bart Meijer in Amsterdam and Donny Kwok in Hong Kong; editing by Veronica Brown and David Evans)

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Photograph: The container ship Ever Given is shown here stuck in the Suez Canal and blocking traffic on the vital waterway on Saturday March 27, 2021. Photo credit: UKTN Photo / Mohamed Elshahed.

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