The dismantling of the container ship blocking the Suez Canal is at least until Wednesday, which is longer than expected exacerbating problems in the global chains of various commodities such as oil, grains and cars.
The large container ship Evergreen ran aground on Tuesday, blocking ships carrying nearly $ 10 billion worth of cargo into Egyptian waterways.
Prolonging transportation on one of the world’s most important waterways puts even more pressure on container carriers already operating at full capacity. This will cause price delays for European companies that depend on the steady flow of imports from Asia and for consumers who are accustomed to buying fast online during epidemics.
Those familiar with the matter have refused to recognize that the task of removing the 200,000-ton Evergreen ship will require about a week of work, and many more. The initial expectation is that the surgery will only take a few days.
“Delays will increase costs, which will put even more inflationary pressure on supply chains,” said Chris Rogers, Panchiva’s chief business analyst at S&P Global Market Intelligence. “Short-term stratification effects are more likely to reduce the inventory of consumer goods and the risk of disruption to timely production supply chains already affected by Brexit and commodity shortages. Extra.”
Even before Evergreen ran down the Suez Canal on Tuesday, the global trade network showed signs of tension over the economic problems of the corona virus epidemic.
The flow of the world’s largest cargo – between China and the United States – faced nearly five-month interruptions in the ports of Los Angeles and Long Beach. Importers have been waiting for weeks for the goods to arrive, with the indirect effect that exporters will not be able to get the bare steel containers needed to ship the goods to other countries.
It is now feared that the Suez Canal crisis will exacerbate Europe’s logistics challenges, resulting in canceled trips, shortage of containers and higher freight rates.
The work carried out by the dugboats and excavators since Tuesday – small equipment compared to the 400-meter ship – has yet to yield results. As rescuers work, the queue for ships loading billions of dollars in oil and consumer goods rose from 186 on Wednesday to more than 300, Bloomberg data show.
Randy Givens, senior vice president of energy marine equity research at Jefferies LLC, says “idle time will definitely last at least two weeks” if unloading cargo of a stranded ship or making major repairs to the canal is necessary. I.H.S. According to Markit, Ever Given could be loaded with goods worth nearly $ 1 billion.
Ships with plans to cross the Suez Canal have begun to choose the more expensive and time-consuming way to sail around Africa.
Freight costs are also rising – the cost of shipping a 12-meter container from China to Europe almost quadrupled a year ago – indicating another burden facing the threat posed by the epidemic.
With the siege of the channel, Bremer estimates that about 2 million barrels of oil flow per day has been stopped. The strike also affects bulk carriers carrying products such as wheat and iron ore. Global manufacturers are already preparing for export delays for finished goods and raw materials important for production taxes.
The caterpillar, the largest machine manufacturer in the United States, said it faces delays in exports and even considers shipping products on board if needed, while Japan’s Envision AESC, a supplier of electric vehicle batteries, said some electrodes depend on the Suez Canal.
For container taxes, which account for 80% of global trade, the long-running crisis between Europe and Asia could damage months-defined shipping calendars so importers can plan purchases, manage stocks and maintain stored store shelves or operating excise taxes.
The problem is getting worse every day. Ships arriving several days late can be left empty and not reloaded on time. As a result, carriers cancel trips and further restrict capacity, which also raises freight rates.
The effects of instant coffee
The Suez Canal crisis could soon reach even instant coffee. The ship, which is one of the world’s most important maritime barriers, not only restricts the export of oil and liquefied natural gas, but also controls strong coffee containers. Europe is most affected by imports via the Suez Canal, but its impact will be felt worldwide as shipping delays exacerbate the shortage of containers hitting food markets.
“In business it is difficult to supply customers in Europe,” says J.L. John Luhmann, founder of Coffee Consulting, previously handled the purchase of coffee at Jacobs Dove Experts, one of the largest coffee rosters in the world. “If we’re lucky, it would take a few days to fix this, but still, a lot of damage has already been done.”
About 12% of global trade passes through the Suez Canal, and waterways are better known for their share of energy markets than agricultural products such as coffee. However, the two largest producers of Robusta coffee – Brazil and C டிte d’Ivoire – do not use this important route to serve the larger consumers in Europe.
Due to the shortage of containers, rosters on the European continent are already finding it difficult to get coffee from Vietnam, the world’s largest robusta manufacturer. As the availability of containers began to improve, blocking the channel brought another headache. All grain imported into Europe from East Africa and Asia flows through the Suez.
“Can rosters withstand a two- to three-week delay? Probably not,” said Rafael Hemmerlin, head of logistics for the trading company Sukafina. “I don’t think they have a stock in general.”
In addition, the downturn due to container holdings will have a global impact, exacerbating a deficit that has already brought U.S. stocks to a six-year low. Hans Hendrickson, who has been selling cocoa and coffee for 40 years, said that apart from the boxes that get stuck on ships in the canal, they will return to ports such as Antwerp and Rotterdam when traffic is destroyed.
“It will take longer to solve the problem and the logistics will be more vulnerable,” said Hendrickson, who now advises exporters and small and medium-sized businesses.
Unlike roasters in the United States, coffee makers in Europe cannot easily use the strong coffee supply from Brazil due to the taste of the products. As a result, some rosters on the continent have recently returned from East Africa to fill Vietnam’s strong grain shortages, buying from countries such as Uganda or through the region’s mild-tasting Arabica beans.
But these grains are also transported through the Suez Canal. Traders with inventory in European warehouses charge higher premiums in the market fire market. In the absence of containers, traders charged $ 450 per tonne for Vietnamese coffee stored in Europe, three times the normal rate.
“The inventory in Europe is very tight and the spot market is set to catch fire,” J.L. Said Luhmann of Coffee Consulting. “Stock in Vietnam is convenient, but what is its value if it cannot be shipped to Europe?”
Brazil has so far benefited from price changes caused by a shortage of containers that hit Vietnam late last year. Robusta’s second largest producer exported 4.9 million bags of coffee in 2020, an increase of 24% over the previous year, according to Sekafa.
Still, most of these grains end up in certified pie stocks, not in toasters. This is because replacing Vietnamese coffee with Brazilian beans will change the taste of the final product for the consumer. An excellent alternative to East African beans.
“Can rosters change their cooking tips?” Asks Hammerlin from Sukafina. “It’s not that easy.”
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