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Here’s Why the Suez Canal Situation is a Huge Deal to Retail

Written by Rob Stott

March 30, 2021

shipping routes Suez Canal

The retail supply chain simply cannot catch a break right now. Over the past 12 months, it’s been one thing after the next hampering manufacturers’ ability to get product from their warehouses and onto the shelves of their retail partners.

First, and still ongoing, is the coronavirus pandemic, which slowed down production as factories closed and reduced staff to maintain social distancing. Then, in the midst of that crisis, a chip shortage (because of increased demand) has hampered so many product categories, from cars to electronics, appliances to smartphones, and more. Furniture and bedding dealers have been hit by lumber shortages (again, because of increased demand). And then the Big Freeze down south put foam manufacturers, and thus, the mattress supply chain, under added stress.

But the forces that be proved earlier this month that they weren’t finished messing with the retail world just yet. Enter, the Ever Given.

Ever Given in Suez Canal

The Ever Given stuck in the Suez Canal (Source: Maxar)

On March 23, the 224,000-ton vessel ran aground in the middle of the Suez Canal, grinding to a complete halt for six days one of the world’s busiest trading routes. How busy? Consider this fact: According to maritime data analytics firm Lloyd’s List, roughly $9.6 billion worth of retail goods pass through the Suez Canal every day — including appliances, electronics, furniture and much more. So, doing some basic finger counting math, by the time the Ever Given was dislodged from the canal on Monday, March 29, nearly $60 billion in consumer goods were held up and unable to reach their final destinations. In fact, as of Monday afternoon, more than 420 ships were still waiting to go through the canal.

The ripple effect is expected to last for quite some time.

“Aside from the delays directly caused by the closure, there is inevitable bunching of vessels that occurs as they call at their next ports,” Ahmed Bashir, Maersk’s head of Global Execution Centers, said in a video posted to the company’s Twitter. “As we work through these clashes, we will feel the ripple effects of this closure for some weeks to come.”

The entire situation is an unfortunate one that shows just how fragile the global shipping network can be. The small, 120-mile strip of waterway, built in a 10-year span in the mid-1800s, connects the Red and Mediterranean Seas, which allows for ships to travel through northeast Egypt and from the Indian to Atlantic Oceans without having to go all the way around the southern horn of Africa.

Ships traveling the Suez saw the voyage between Mumbai and London nearly halved from 12,400 miles to 7,250 once the canal was built. But, as we saw this week, all it takes is one unfortunate low-tide-massive-ship situation to effectively undo all of that work.

(Featured image credit: Wikimedia Commons)

 

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