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World Egypt's commerce reputation survives Suez blockage: analysts

13:00  31 march  2021
13:00  31 march  2021 Source:   afp.com

Opinion: Suez Canal traffic jam blocks the world's jugular vein

  Opinion: Suez Canal traffic jam blocks the world's jugular vein A failure of machinery, human error or natural events -- high winds and reduced visibility - may have caused Ever Given to run ashore in the Suez Canal, writes Salvatore R. Mercogliano. But its impact will resonate far from its banks as it has blocked the jugular of one of the largest trade routes in human history. The Suez Canal was opened in November 1869 to great fanfare after 10 years of excavation. A joint endeavor by France and Great Britain, it provided a shorter route to Asia than having to circumnavigate Africa. Connecting the Mediterranean Sea and the Indian Ocean via the Red Sea, the vital waterway was essential to maritime commerce.

Egypt ' s president has ordered preparations be made to unload the cargo of the Ever Given ship if refloating fails, according to local media reports. President Abdel Fattah Al-Sisi outlined the plan to the Suez Canal Authority on Sunday morning, Daily News Egypt reported. It is likely that an effort to remove cargo boxes from the ship would take several days, Bloomberg reported. The Ever Given carries a load of 20,000 containers. The Ever Given ship has caused a blockage in the Suez Canal since Tuesday morning. The incident is costing the global economy billions and has caused hundreds

SUEZ , Egypt — Experts boarded the massive container ship Tuesday that had blocked Egypt ' s vital Suez Canal and disrupted global trade for nearly a week, seeking answers to a single question that could have billions of dollars in legal repercussions: What went wrong? As convoys of ships again began travelling through the artery linking the Mediterranean and Red Seas, a The grounding of the ship had halted billions of dollars a day in maritime commerce . Analysts expect it could take at least another 10 days to clear the backlog — though Egypt ' s president said Tuesday it would take just three.

The near week-long shutdown of the Suez Canal threw an uncomfortable international spotlight on Egypt, but experts see limited overall fallout for its commercial shipping reputation.

a large ship in a body of water: Tugboats pull the Panama-flagged MV Ever Given to unobtrusive sanctuary after its stern and bow were successfully prised from the banks of the Suez Canal © - Tugboats pull the Panama-flagged MV Ever Given to unobtrusive sanctuary after its stern and bow were successfully prised from the banks of the Suez Canal

The accident, in which a 200,000-tonne container vessel became wedged diagonally across the canal during a sandstorm, blocked a crucial shipping artery used for 10 percent or more of world trade.

But fears that it could take weeks to refloat the behemoth proved unfounded.

Suez Canal Remains Choked as Elite Team Tackles Stuck Ship

  Suez Canal Remains Choked as Elite Team Tackles Stuck Ship A huge backlog of vessels was building up around the Suez Canal amid warnings that the salvage team could need days -- or even weeks -- to prise out the giant container ship that’s blocking the crucial waterway. Work to re-float the Ever Given and allow passage for oceangoing carriers hauling almost $10 billion of oil and consumer goods continued without success on Thursday in Egypt. Tugs and diggers have so far failed to budge the vessel, and some experts say the crisis could drag on for several days. The Suez Canal Authority has temporarily suspended traffic along the waterway.

The state-owned authority operating the Suez Canal is considering some financial initiatives for vessels that were unable to pass through the vital waterway blocked by a skyscraper-sized container ship. The Ever Given, which has been stuck in the canal since Tuesday, created a backlog of nearly 370 vessels, including 25 oil tankers, Osama Rabie, head of the Suez Canal Authority, told Al Arabiya on Sunday. He added that the authority is working to meet the logistical needs of the stuck vessels and may provide discounts for them.

Two additional tugboats sped Sunday to Egypt ' s Suez Canal to aid efforts to free the skyscraper-sized container ship wedged for days across the crucial waterway, even as major shippers increasingly divert their boats out of fear the vessel may take even longer to free. The plight of a mammoth container ship stuck in Egypt ’ s Suez Canal has highlighted still more pressure points in global trade, a year after supply chains were disrupted by the coronavirus pandemic. Salvage teams managed to free the Ever Given on Monday, but it was unclear when ship traffic through the critical trade gateway would return

Six days into the crisis, after major operations involving a flotilla of tug boats and excavators dredging up sand, the Japanese-owned MV Ever Given was freed and taken to an unobtrusive anchorage.

Egypt's Suez Canal Authority was quick to claim credit.

"Anywhere else in the world, this operation would have taken three months," boasted canal chief Osama Rabie, adding that "99 percent" of personnel working at the scene had been Egyptian.

Visibly relieved, he said he had been told by President Abdel Fattah Al-Sisi that "the reputation of Egypt rested on my shoulders".

Sisi, who deposed Islamist president Mohamed Morsi in 2013, spent over $8 billion to widen and add a 35 kilometre (21 mile) second lane on a northern segment of the canal amid much pomp six years ago.

Energy, retail, and food: Ever Given blockage threatens supply chains

  Energy, retail, and food: Ever Given blockage threatens supply chains Global trade has been unsettled after a massive container vessel became wedged in the Suez Canal and blocked passage, possibly for weeks to come. © Provided by Washington Examiner The 200,000-ton behemoth known as Ever Given ran aground earlier this week when a powerful sandstorm packing winds in excess of 45 mph buffeted the ship and caused it to become lodged between the banks of the critical passageway. Since the incident, officials have been working to dislodge the vessel, although estimates about how long that might take vary from days to weeks.

Egypt has reopened the canal' s older channel to divert some traffic until the grounded ship can move again. The blockage sent oil prices climbing on international markets. Fears that the blockage could tie up shipments of crude oil caused prices to rise by 4% on international markets on Wednesday, Reuters reported. The Kpler energy intelligence service said that more than 20 oil tankers carrying crude and refined products were affected by the jam. "This is the largest vessel ever to go aground in the Suez Canal," he said, adding that the ship got lodged in the embankment and would have lost

Economists and analysts have said that the blockage would further disrupt a global supply chain that has already been stretched thin by the Wuhan coronavirus (COVID-19) pand. Therefore, the blockage is expected to have a ripple effect through manufacturing supply chains and shipping costs. Blockage could mean higher prices for consumers. The Ever Given got stuck because of a sandstorm in the canal, which is maintained by the Suez Canal Authority (SCA) of the Egyptian government.

The country has emerged from the short crisis with credit, said Tony Munoz, editor-in-chief at trade publication Maritime Executive.

"The Egyptian government handled the blockage and closure of the critical trade lane exceptionally well, considering the intense international pressure," Munoz told AFP.

- 'A big one' -

However, Munoz also pointed to the significant role played by the international salvage specialists who worked alongside Egyptian personnel.

a large ship in a body of water: A ship on its way near Egypt's Suez Canal on March 30, 2021, a day after passage of the waterway was made possible once more by the dislodging of a giant container ship © Tarek WAJEH A ship on its way near Egypt's Suez Canal on March 30, 2021, a day after passage of the waterway was made possible once more by the dislodging of a giant container ship

Munoz cited in particular the crisis management expertise provided by Resolve Marine's Captain Nick Sloane, who was also salvage master for the clear-up of the 2012 Costa Concordia cruise ship disaster off Italy.

Another expert likewise said international help was crucial.

Ever Given, the giant ship blocking the Suez Canal, had another accident in 2019 when it crashed into a small ferry in Germany

  Ever Given, the giant ship blocking the Suez Canal, had another accident in 2019 when it crashed into a small ferry in Germany The Suez Canal blockage is not the first accident for the big boat, and winds were also named as the cause in the 2019 incident.But apparently, it wasn't the first accident for the big boat.

Egypt is estimated to be losing about million per day in revenue as the Suez Canal Authority has been unable to collect fees from vessels passing through the waterway, according to financial data company Refinitiv. Ever Given, the 200,000 tonne ship carrying 20,000 containers, was partially refloated on Monday after high winds blew it off course on March 23, blocking a vital waterway for global trade. It is expected to take some time to clear a backlog of more than 400 vessels at either end of the waterway. “Without transits for the past six days, the loss in revenue for the Suez Canal

Delays in freeing a mammoth container ship stuck in Egypt ’ s Suez Canal have highlighted still more pressure points in global trade, a year after supply chains were disrupted by the pandemic. North and Latin America are likely to be less affected than Europe by the blockage in the Suez Canal, because much of the shipping container traffic that runs between the Americas and Asia moves through the Pacific to hubs like the Ports of Los Angeles and Long Beach, or crosses through the Panama Canal.

"There was bound to be some domestic flag-waving about the success of the refloating... but it does not diminish the Dutch involvement," said Angus Blair of the American University in Cairo, referring to Dutch firm Smit Salvage.

a large ship in a body of water: Egyptian coast guards patrol as a ship navigates the newly reopened Suez Canal after a near week-long blockage © Tarek WAJEH Egyptian coast guards patrol as a ship navigates the newly reopened Suez Canal after a near week-long blockage

Both Blair and Munoz saw little or no impact from the canal blockage on Egypt's share of shipping cargo traffic over the medium-term.

"In essence, this was only a traffic accident -- (albeit) a big one," said Blair.

"Airports have accidents, but within hours to a day the airport will reopen and then there is an investigation to determine the cause," he added. "So, I do not think there is damage to Egypt's reputation".

Munoz noted that "the alternative of sailing around Africa is not reasonable", emphasising that the whole "purpose of these mega-boxships is to reduce port calls and operational costs".

- 'Reputational damage' -

But Yezid Sayigh, a senior fellow at the Carnegie Middle East Center, noted that "when oil prices drop below a certain level, the longer route around the Cape of Good Hope becomes cheaper", referring to the route around southern Africa.

Engineers start to refloat ship stuck in Egypt's Suez Canal

  Engineers start to refloat ship stuck in Egypt's Suez Canal Egyptian authorities said engineers have "successfully started to refloat" the colossal cargo ship that became stuck on the banks of the Suez Canal last week. The so-called Ever Given, a 224,000-ton, 1,300-foot-long container ship registered in Panama, was freed from the shoreline as its course was corrected by 80%. The engineers, who have been trying for days to pull the fully laden vessel with tug boats, are scheduled to resume their efforts later Monday morning as the water level rises to its maximum, "allowing the ship's course to be completely straightened," according to a statement from Egypt's Suez Canal Authority.

An expert on the enormous economic sway of Egypt's military, Sayigh has long seen the costly 2014-15 expansion of the canal as ill-judged.

In a 2019 study, he noted that "Sisi's demand that it be completed within one year rather than the three years it was estimated to require" contributed to the cost of the project more than doubling from initial estimates.

Abdel Fattah el-Sisi wearing a suit and tie: Egypt's President Abdelfattah al-Sisi at a ceremony for the opening of a second lane and widening of the Suez Canal in August 2015, a project that cost over $8 billion © KHALED DESOUKI Egypt's President Abdelfattah al-Sisi at a ceremony for the opening of a second lane and widening of the Suez Canal in August 2015, a project that cost over $8 billion

The 2014-15 expansion was driven by overly optimistic shipping traffic projections, amid competition for some Asia-Europe cargo traffic from the Panama canal and Arctic shipping route, he told AFP.

The blockage of the canal caused tailbacks stretching to hundreds of cargo ships at the northern and southern entrances © Mahmoud KHALED The blockage of the canal caused tailbacks stretching to hundreds of cargo ships at the northern and southern entrances

The Suez Canal earned Egypt just over $5.7 billion in 2019/20, little changed from the year before, and similar to the $5.3 billion in revenues earned back in 2014.

But the expansion project had anticipated annual transit fees would hit $13.5 billion by 2023.

Faced with this disappointing balance sheet, even Sisi was quick this week to rule out a costly widening of the southern section of the canal where the Ever Given got stuck.

While the immediate shipping traffic jams should clear before the end of the week, apportioning responsibility for losses suffered by the numerous parties is likely to play out through litigation, according to credit ratings agency DBRS Morningstar.

That could ensure uncomfortable scrutiny of Egypt extends well beyond the canal blockage.

"Egypt has resisted transparency" over a number of incidents, including "the murder of Italian PhD student Giulio Regeni in 2016," noted Sayigh.

Regeni was researching Egyptian trade unions when he was abducted in January 2016; his mutilated body was found on Cairo's outskirts, and Italian prosecutors want to put four Egyptian security officers on trial for the killing.

When it comes to the Suez probe, Egyptian authorities "would be well advised to be very transparent in this instance so as to avoid further reputational damage," Sayigh told AFP.

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Trolls attack Egypt's first female sea captain after Suez Canal ship mishap .
Egypt's first female sea captain says she was skewered on social media although she was working on a ship hundreds of miles from the Ever Given.The controversy comes as the canal authority announced that the backup of ships was finally cleared Saturday, 11 days after the Ever Given became wedged across a narrow section of the canal and six days after the ship was freed.

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