Stuck in Suez

The Suez Canal maintains its strategic importance.

The Suez Canal’s 2021 blockage has highlighted a few points about the strategic waterway’s importance.

On 23 March, 2021, the container ship Ever Given was diagonally wedged across the Suez Canal as a result of losing the ability to steer in the face of strong winds. The 400-meter-long vessel, which is among the largest container ships in service in the world, blocked the waterway for the next six days.

With the traffic coming to a standstill through the strategic choke point, the global shipping industry was affected. It was estimated that roughly USD10 billion worth of trade was held up every day. The compensations claim for damages to the canal itself exceeded USD916 million.

After the engagement of various consultants by the Suez Canal Authority and the help of tugboats from several countries, Ever Given was ultimately salvaged and towed to the Great Bitter Lake on the afternoon of 29 March, and shipping resumed shortly afterwards.

A waterway of critical importance

The first thing that the incident of March, 2021, highlighted was the strategic importance of the Suez Canal for the global economy.

The canal has certainly seen other periods of closure throughout its 150-year history, but its has never been more indispensable to international maritime trade than today. Over 50 mega-sized container ships and tankers pass through the Suez Canal every day, which account for 12-15% of the entire global trade.

“Every day the canal is closed… container ships and tankers are not delivering food, fuel and manufactured goods to Europe and goods are not being exported from Europe to the Far East,” maritime commentator, Sal Mercogliano, told Associated Press in 2021.

Choke points are named so for a reason!

In light of the Suez Canal’s importance as part of trade routes linking the Atlantic to the Indian Ocean, some have argued that the canal is currently more vulnerable than it ought to be.

From a system management point of view, the Suez Canal does not have a high degree of “robustness,” meaning a failure at any point across the waterway can bring the traffic to a halt. Although a parallel waterway was launched in 2016, the two lanes merge at certain parts, creating a potential bottleneck.

It was at one of these parts that Ever Given got stuck in 2021. In the absence of an alternative to the main waterway, some ships decided to circumnavigate Africa via the Cape of Good Hope.

In April, 2021, The Guardian published an April Fools’ article discussing the construction of a second Suez Canal, which may not be such a foolish idea after all, as we will see.

The wider, the better

Moreover, the canal is not wide enough, or at least not wide enough for the likes of Ever Given.

In the past, the largest class of container ships were called the Suezmax. Literally named after the Suez Canal, this class of ships carried up to 12,000 TEUs. However, we have seen the rise of a new class known as ultra-large container vessels (ULCV), which carry well over 20,000 TEUs. Ever Given belonged to this class, and more ULCVs are currently under construction by shipbuilders.

It is not fair to say that huge container ships cannot currently sail through the Suez Canal—Ever Given itself had made the journey over 20 times before the incident—, but a widening operation seems to be inevitable as more ULCVs are launched.

Final note

The Suez Canal is more than anything a profitable business. The canal authority has singled out the year 2022 as its best year on record in terms of revenue, with over USD8 billion of net revenue from transit fees.

Although the canal is primarily a source of foreign currency for the Egyptian economy, it has been profitable enough to also support the finance of its own expansion projects.

Sparked by the Ever Given incident, a project was commissioned by the Suez Canal Authority in July, 2021, to extend the parallel waterway while widening the main channel, which is expected to be completed by July, 2023.

We should wait until July see if further projects will follow to make the strategic choke point more suitable for modern maritime transportation in 2023.