Shipping Rates Surge With Africa Trip Only Option: Suez Update

(Bloomberg) -- Supply Lines is a daily newsletter that tracks trade and supply chains disrupted by the pandemic. Sign up here, and subscribe to our Covid-19 podcast for the latest news and analysis.

Shipping rates are surging as the blockage of the Suez Canal is wreaking havoc in the global seaborne trade and making the long trip around Africa the only short-term alternative.

Meanwhile a super suction dredger is the new tool being used in the efforts to dislodge the giant Ever Given container ship that went aground in the key waterway on Tuesday.

The blocking of the waterway is creating another setback for global supply chains already strained by the e-commerce boom linked to the pandemic. About 12% of global trade goes through the canal that’s so strategic world powers have fought over it.

Key Highlights:

• 238 vessels were queued up Thursday, up from 186 Wednesday, according to Bloomberg data
• Ever Given has not moved and operations to re-float were still ongoing earlier in the afternoon, according to Inchcape Shipping Services

All time stamps London

Suez Canal Traffic Snarl Is Making Shipping Costs Skyrocket (9:10 p.m.)

It’s going to be tough to come up with a single figure for how much the epic traffic jam in the canal is costing, but shipping rates are already skyrocketing.

The cost to ship a 40-foot container from China to Europe has climbed to about $8,000, almost quadruple the figure a year ago. Suezmax vessels, which typically carry 1 million barrels of oil, are now getting about $17,000 a day, the most since June 2020.

Your Instant Coffee May Soon Be at Risk From Suez Blockage (9:07 p.m.)

The crisis in the Suez Canal is also curbing shipments of robusta coffee -- the type used to make Nescafe. All of the beans from East Africa and Asia -- which houses two of the world’s top robusta producers -- flow to Europe via the Suez.

Coffee roasters on the continent had already been struggling to get robusta coffee from Vietnam, the world’s largest producer, due to a shortage of shipping containers that has upended the global food trade. Just when the availability of boxes started improving, the canal blockage brought another headache.

Caterpillar Facing Shipment Delays Due to Suez Blockage (8:35 p.m.)

Caterpillar Inc., the U.S.’s largest machinery producer and one of the biggest in the world, is facing shipment delays due to the Suez Canal blockage and is even considering airlifting products if necessary.

The producer of iconic yellow diggers and bulldozers is anticipating a lag of a week or more in shipments from Asia to its facilities in Europe, according to a person familiar with the matter. The company is already contending with delivery delays of up to three weeks as countries around the world reopen, driving extraordinary demand for its products, according to the person.

Suction Dredger Deployed in Effort to Refloat Ship (8:14 p.m.)

A specialized suction dredger is the new tool being used in the efforts to dislodge the Ever Given, which has been stuck in the Suez Canal since Wednesday, according to a statement from the ship’s manager, Bernhard Schulte Shipmanagement.

The suction dredger can dislodge 2,000 cubic meters of material per hour and was ready to begin work. A team of expert salvors from SMIT Salvage were at the vessel. The focus is dredging to remove sand and mud around the port side of vessels’ bow.

Blocked Suez Forces Ships to Look at Long Trip Around Africa (8:03 p.m.)

The Suez Canal blockage showed no signs of budging for a third day, forcing container carriers and other vessels to weigh costly and time-consuming voyages around Africa.

Two liquefied natural gas tankers loaded in the U.S. and bound for Asian markets appear to have changed course in the mid-Atlantic and are now heading around Africa to avoid gridlock in the Suez waterway. A.P. Moller-Maersk A/S and Hapag-Lloyd AG are considering sending ships along the same route, moves that would follow a Synergy Marine-managed ship that is being sent around the Cape of Good Hope. Torm A/S, a Danish owner of tankers, said its customers have asked about the cost of options to divert.

Canal Traffic Jam Has Doubled to 238 Ships (5:37 p.m.)

The number of ships waiting to enter the Suez Canal is growing as the waterway remains blocked.

Data compiled by Bloomberg shows there were 238 vessels queued up Thursday, compared with 186 counted on Wednesday and around 100 at the start of the blockage.

Container Ship Diverting to Avoid Canal, Synergy Marine Says (5:23 p.m.)

A container ship is being diverted around South Africa’s Cape of Good Hope to avoid the blocked Suez Canal, according to Rajesh Unni, a captain and chief executive officer of Synergy Marine.

Eight of more than 375 ships managed by Synergy Marine are caught up in the Suez Canal traffic jam. That includes a 20,000 TEU Ultra Large Container Vessel, or ULCV, three other large container ships, one Very Large Gas carrier, one chemical tanker and two bulk carriers.

“The longer the Canal is closed, the larger the queue of vessels that will be caught up in jams and the bigger the losses for shipping and, ultimately, consumers of the goods which we transport,” Unni siad.

Russia Gas Exports to Benefit From Blockage (4:32 p.m.)

Russia natural gas supplies via pipeline could provide Europe with some flexibility as LNG imports from the Middle East are affected by the blockage at the Suez Canal, consulting firm Rystad said in a note.

The U.S. could also benefit as shipments from its LNG export terminals could reach Europe much quicker than vessel going around Africa from the Middle East.

“It could be a perfect opportunity for U.S. producers to secure some orders at a time of such a transport route crisis,” Rystad said.

Not Much Room to Maneuver (3:39 p.m.)

It’s no wonder the stuck Ever Given in the Suez Canal is creating such a headache.

The key trade route is narrow -- less than 675 feet wide (205 meters) in some places -- and can be difficult to navigate. Work to re-float the giant container ship -- about a quarter mile long (400 meters) -- and allow passage for oceangoing carriers hauling almost $10 billion of everything from commodities to consumer goods continued without success on Thursday in Egypt.

The blockage highlights a major risk faced by the shipping industry as more and more vessels, which are getting bigger and bigger, transit maritime choke points including the Suez, Panama Canal and the Strait of Hormuz.

©2021 Bloomberg L.P.