Global supply chains scrambled: Suez Canal blockage could cost global trade $10bn a week

CAIRO: The Suez Canal stepped up efforts on Friday to free a stuck mega vessel, after an earlier attempt failed to end a blockage that has lifted shipping rates for fuel tankers and scrambled global supply chains for everything from grains to baby clothes.

In Washington, the White House said the Biden administration was seeing the impact of the incident on energy markets and would respond to the situation if required.

Shipping rates for oil product tankers have nearly doubled after the 400-metre (430-yard) long Ever Given ran aground in the vital trade waterway on Tuesday due to strong wind.

Efforts to free it may take weeks and be complicated by unstable weather, threatening costly delays for companies already dealing with COVID-19 restrictions.

All its 25 crew members, who have remained on board, were safe, in good health and spirits, Bernhard Schulte Shipmanagement (BSM), the Ever Given's technical manager said.

The Dutch rescue team had confirmed that two additional tugs would arrive on March 28 to help dislodge the ship after an attempt to re-float it on Friday failed, BSM said.

"There have been no reports of pollution or cargo damage and initial investigations rule out any mechanical or engine failure as a cause of the grounding," a BSM statement said.

The Suez Canal Authority (SCA) said efforts to free the ship by tug would resume as soon as dredging operations at its bow to remove 20,000 cubic metres of sand are complete.

"In addition to the dredgers already on site a specialised suction dredger is now with the vessel and will shortly begin work. This dredger can shift 2,000 cubic metres of material every hour," it said.

The SCA said it welcomed a U.S. offer to help. Turkey also said it can send a vessel to the canal, amid a push by Ankara to repair ties with Egypt after years of animosity.

The suspension of traffic along the channel linking Europe and Asia has deepened problems for shipping lines already facing coronavirus-related disruption in supplying retail goods to consumers.

The blockage could cost global trade $6 billion to $10 billion a week, a study by German insurer Allianz showed on Friday.

Ratings agency Moody's expects Europe's manufacturing and car parts suppliers to be most affected because they operate "just-in-time" supply chains. "Even if the situation is resolved within the next 48 hours, port congestion and further delays to an already constrained supply chain is inevitable," it said.

IMPACT ON OIL

About two dozen ships could be seen from the shores of Port Said on Friday morning, according to a Reuters witness.

Oil prices rose over 3% on Friday as more than 30 oil tankers have been waiting on either side of the canal since Tuesday, shipping data on Refinitiv showed.