See that featured image above? That’s how the Suez canal should look. Clear and free-flowing. Instead, there is a gigantic ship stuck near-sideways across the canal. Whilst this was a bit of a novelty story at first, with the assumption that it might be refloated within a day or two and then all would be well, things have not turned out that way. And it’s becoming a problem.
A global and local problem
The Suez Canal, constructed in 1859, is one of the busiest shipping routes in the world. 12-13% of global trade passes through the canal. 50 ships a day pass through the canal, with a value of $3bn to $9bn worth of cargo. Right now, this passage is blocked due a ship called the Ever Given, which is owned by the Taiwanese firm Evergreen Marine and owned by Shoei Kisen of Japan. The ship, although not the biggest in the world, is 400m (1300ft) long and over 200,000, which still makes this an incredibly large ship.
At the moment, the blockage is costing global trade a staggering $400m per HOUR. Several attempts have been made to dredge and dig out the hull of the ship but so far all attempts have been unsuccessful. Although at the time of writing there are reports that some slight movement of the hull has been made, but no refloating as of yet. Experts have warned it may take weeks to eventually get the ship moving again, and weeks more to clear the backlog of ships waiting on either side of the canal.
This is no longer a novelty story. As each day passes, the ramifications for global trade grow more and more serious. Oil prices have risen as a result. Syria is now rationing fuel supplies, and there are now fears that it could have an impact on the pace of the global recovery if supplies are held up any longer. Shipping companies face a hard choice. Either wait it out and hope that the blockage is cleared soon, but wait days, if not weeks for the backlog to clear. Or reroute around the Cape of Good Hope in South Africa and go the long way round. That option adds 12-14 days to the trip and an additional $300,000 in fuel charges.
Much of Asian trade to Europe and the UK comes via the canal. It is therefore quite feasible that products destined for UK fenestration, such as composite door slabs and hardware are being held up due to the blockage. I am trying to make enquiries to confirm if this is indeed the case. If so, then this will be another problem to add to the rest which is already causing great strains on the supply chain during a period of very high demand.
A dramatic reminder
The longer this period of high demand continues, and the more problems the supply chain has to tackle, the more it reminds us of the fragility of the supply of goods into this sector, and the UK in general. When domestic sectors are so heavily reliant on supply from overseas, it leaves us highly susceptible to problems that are not of our own making.
The pandemic itself has demonstrated this. At the start of 2020, when the pandemic was primarily a China problem, our biggest concern at the time was the dwindling supply of window and door hardware. I remember at the time a great deal of the sector getting very twitchy about whether or not we would run out of supplies. This was a problem, thousands of miles away, having a direct impact on our sector.
Now we have the Suez blockage and potentially weeks of delays and the inevitable price increases. Again, a problem out of our control, but one that may well have an impact on us in the next few weeks.
As a result of high demand and the pandemic putting a massive strain on the supply chain, prices of many raw materials are out of control. Glass, resin, steel have all seen repeated prices increases in a short space of time. In the past, the argument for making a great deal of what we use abroad and then import it to the UK has been that it is cheaper than to make it here. But how long will this argument win out? Is it now really that much cheaper than making components here? Shipping containers can cost upwards of $16,000 now, tens times what it was. Manufacturing lead times are stretching further as they struggle to keep pace with demand. Global problems are putting further pressure on supply chains.
We must now be looking to boost domestic manufacture of UK fenestration products. More made here means we control the supply chain, making it more secure. The argument of things being more expensive to make here is diminished with each price increase. The benefits are obvious. More jobs, products made to high British standards. Reduced lead times in the future. We have been over this many times before, but given the current global situation, the argument grows stronger. And let’s be honest, once the world is used to paying $16,000 for a shipping container, do we really think those prices are going to come down?
There may well be a lot of news that could affect us this coming week, the Suez issue being one of them. Keep an eye on this one.
UPDATE – MON 29th MARCH 11AM:
The Ever Given, the ship that has been stuck in the canal for a week has now been freed according to reports. At the time of this update, the ship is not yet moving, however, there are hopes that the ship can start to move up the canal later on today, which would allow the hundreds of ships waiting on either side of the canal to begin moving again.
Officials have warned that it may take a week or so to clear the backlog. This article will be updated when new information becomes available.
UPDATE – MON 29TH MARCH 16:26PM:
The Ever Given has now been refloated and is travelling along the canal once again. Other ships that have been waiting to transit the canal are reportedly moving again. Some estimates say the time needed to clear the backlog of ships could take a week. Although there are now warnings that there will be further pressure at major ports in Europe and elsewhere as a flurry of ships come in quick succession rather than the usual steadier pace.
This is good news for all involved, although there is likely to be an enquiry as to the events that lead to the beaching of this enormous ship.
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