Joy as megaship refloated, Suez Canal reopens to traffic

Suez, Egypt: The MV Ever Given was refloated and the Suez Canal reopened to traffic Monday, sparking relief almost a week after the huge container ship got stuck and blocked a major artery for global trade.

Tugboat crews sounded their foghorns in celebration after the Japanese-owned megaship the length of four football fields was fully dislodged from the sandy banks of the Suez.

World oil prices eased on the news of the reopening of the waterway that connects the Mediterranean and Red Sea and through which more than 10 percent of world trade passes.

Suez Canal Authority official Khaled Taha told reporters in the city of Ismailia on the Suez that maritime traffic had restarted after the "successful refloating".

The SCA cautioned, however, that it will take more than three days to clear the traffic jam of ships stuck at the northern and southern ends of the canal.

In the hours before the ship was dislodged, the tailbacks had reached 425 vessels.

Canal services provider Leth Agencies said in a tweet that the MV Ever Given had been "safely escorted to Great Bitter Lake" by the authority. Forty-three vessels were expected to leave the transit area heading south, it added.

Maritime data company Lloyd's List said the blockage had held up an estimated $9.6 billion worth of cargo each day between Asia and Europe.

'A very tight jam'

In the small canal-side village of Manchiyet al-Rougoula, residents watched in amazement as the immense container ship left the bank.

A father and his family climbed to the roof of their red brick house to get a better view as the ship with at least nine levels of containers slowly passed by.

"We are happy to see the boat move (and) thank God," said one resident who asked not to be named.

A former SCA chairman, Mohab Mamish, expressed pride in the operation, telling AFP: "I am well and truly overjoyed ... We were able to get out of a very tight jam."

On social media too, Egyptians greeted the news with jubilation and shared a flurry of memes, including a video montage of a man representing Egypt triumphantly carrying the ship on his shoulders, to applause from the world.

Ahmed Abbas, a Suez canal employee, shared live footage from the scene on his Facebook account, exclaiming: "Praise be to God, the vessel is finally out! Well done to the SCA boys!"

Egypt has lost some $12-14 million in transit revenues each day that the ship was stuck, according to the canal authority.

Dutch company Boskalis, which played a key role in the rescue operation, said its "team of experts, working in close collaboration with the Suez Canal Authority, successfully refloated" the MV Ever Given.

The operation carried out under time pressure and "the watchful eye of the world", required 13 tug boats and the dredging of some 30,000 cubic meters of sand, said Peter Berdowski, CEO of Boskalis.

The freed vessel traveled north to the Great Bitter Lake, through which the canal passes, "for an inspection of its seaworthiness", said the Taiwan company Evergreen which operates the ship.

"The outcome of that inspection will determine whether the ship can resume its scheduled service."

'Enormous complexity'

The stern of the ship was dislodged early Monday, sparking immediate praise from Egypt's President Abdel Fattah al-Sisi, even as Boskalis initially warned that the bow would prove more difficult to unwedge.

"Today, Egyptians have been successful in putting to an end the crisis of the stranded ship in the Suez Canal, despite the enormous complexity surrounding the process," Sisi said.

Salvage crews worked around the clock ever since the accident which was blamed on high winds and poor visibility during a sandstorm, although the canal authority also cited the possibility of human error.

Rescue teams had focused on efforts to remove sand around the ship, which was dredged up to a depth of 18 meters (59 feet).

The crisis forced companies to choose between waiting or rerouting vessels around Africa, which adds 9,000 kilometers (5,500 miles) and over a week of travel to the trip between Asia and Europe.

In a sign of the knock-on effects from the Suez blockage, authorities in war-wracked Syria said the crisis had hit its fuel imports from Iran and forced it to ration already scarce supplies.

Romania's animal health agency said 11 ships carrying livestock out of the country were also impacted, while the charity Animals International had warned of a potential "tragedy" affecting some 130,000 animals.

What happened?

The 400-meter (1,300-foot) long, 200,000-tonne MV Ever Given, categorized as a "megaship", veered off course in the canal when a gale-force duststorm hit Egypt's Sinai Desert and much of the Middle East.

The 59-meter (195-foot) wide Panama-flagged vessel became stuck at about 0540 GMT near the southern end of the canal and diagonally blocked the man-made waterway between the Mediterranean and the Red Sea.

The ship's operator, Evergreen Marine Corp of Taiwan, said the vessel -- en route from Yantian, China to the Dutch port of Rotterdam -- "ran aground after a suspected gust of wind hit it".

But the head of the Suez Canal Authority (SCA), Osama Rabie, told reporters Saturday the accident may have been due to "technical or human errors", rather than the 40-knot winds.

The 25 crew were unhurt, the hull and cargo undamaged, and there was no oil leak, said Singapore-based Bernhard Schulte Shipmanagement (BSM), which provides management services for the megaship.

What's the impact?

The vessel blocked the shipping artery through which more than 10 percent of global maritime trade passes, much of it oil and grain.

The Suez Canal which opened in 1869 and widened since is a crucial shortcut between Asia and Europe that saves ships from having to navigate around Africa.

As a result of the accident, more than 400 vessels were treading water at either end of the canal by Monday.

The blockage of the global trade chokepoint hit world oil markets, as traders anticipated delays in deliveries. Crude futures surged six percent last Wednesday before falling again amid pandemic and inflation fears.

"We've never seen anything like it before," said Ranjith Raja, Middle East oil and shipping researcher at international financial data firm Refinitiv.

"It is likely that the congestion... will take several days or weeks to sort out as it will have a knock-on effect on other convoys."

Lloyd's List, a shipping data and news company, said firms were being forced to consider "taking the far longer route around the Cape of Good Hope to get to Europe or the east coast of North America", a diversion that can take an additional 12 days.

Shipping expert Rose George told AFP on Friday the blockage was certain to cause price increases for consumers around the world.

In signs of the knock-on effects, Syrian authorities said Saturday they had been forced to ration already scarce fuel supplies, while Romania's animal health agency said 11 ships carrying livestock out of the country were affected by the traffic suspension.

Egypt is losing some $12-14 million in revenue from the canal for each day it is closed, Rabie said, while Lloyd's List said the blockage is holding up an estimated $9.6 billion worth of cargo each day between Asia and Europe.

What's next?

Early Monday, a flotilla of tugs succeeded in shifting the front and back of the ship, to reorientate it "80 percent in the right direction," Rabie said.

The SCA chief called the start of the refloating process a "success", but an official from Ever Given's owners Shoei Kisen cautioned that while the ship "has turned", so far it was "not afloat".

Further efforts to refloat the vessel were due to get underway late morning local time on Monday.

Salvage crews have been working around the clock.

They had focussed on efforts to remove sand around the ship, with 27,000 cubic meters (over 950,000 cubic feet) cleared at a depth of 18 meters (59 feet), SCA spokesman George Safwat said Sunday.

Once the 200,000-tonne ship is fully afloat, it will take around three and a half days to clear the traffic jam of ships, Rabie said Monday, praising rescue efforts with tugs that had succeeded in shifting the stern of the ship.

Aladdin's cave of goods stranded

An Aladdin's cave of goods ranging from IKEA furnishings to tens of thousands of livestock is stuck in a maritime traffic jam caused by the Suez Canal blockage.

More than 360 vessels have been stranded in the Mediterranean to the north and in the Red Sea at the other end as well as in holding zones since giant container ship MV Ever Given was wedged diagonally Tuesday across the Suez, a lifeline for world trade.

Industry experts have estimated the total value of goods marooned at sea at anywhere between $3 billion and $9.6 billion.

Some 1.74 million barrels of oil a day are normally shipped through the canal, but 80 percent of Gulf exports to Europe pass through the Sumed pipeline that crosses Egypt, according to Paola Rodriguez Masiu of Rystad Energy.

According to MarineTraffic, about 100 ships laden with oil or refined products were in holding areas Sunday.

Crude prices shot up on Wednesday in response to the Suez blockage before dropping the next day.

Sanctions-hit Syria, however, on Saturday announced a new round of fuel rationing after the hold-up delayed a shipment of oil products from ally Iran.

'Adds to volatile situation'

Apart from goods, some 130,000 head of livestock on 11 ships sent from Romania has also been held up.

"My greatest fear is that animals run out of food and water and they get stuck on the ships because they cannot be unloaded somewhere else for paperwork reasons," Gerrit Weidinger, EU coordinator for NGO Animals International, told the British newspaper The Guardian.

Egypt, for its part, has sent fodder and three teams of vets to examine livestock stuck at sea, some bound for Jordan.

Sweden's IKEA said it has 110 containers on the stricken Ever Given and other ships in the pile-up.

"The blockage of the Suez Canal is an additional constraint to an already challenging and volatile situation for global supply chains brought on by the pandemic," an IKEA spokesperson said.

The Van Rees Group, based in Rotterdam, said 80 containers of tea were trapped at sea on 15 vessels and said there could be "chaos" for the company as supplies dried up.

Dave Hinton, the owner of a timber company in northwest England, said he had a consignment of French oak stuck on a ship.

The oak had been sent from France for reprocessing into veneered flooring in China, and was on its way back to a customer in Britain, Hinton said.

"I've spoken to my customer and told him the bad news that his floor was blocking the Suez Canal. He didn't believe me, he thought I was pulling his leg," he told BBC radio on Friday.

Shipping giants such as Denmark's Maersk have re-routed ships to the long journey around South Africa's Cape of Good Hope, adding at least seven days to the travel time.

Even if the Ever Given were dislodged, Maersk estimated Saturday it would take between three and six days for the stranded ships to pass through the canal.

The company said that 32 Maersk and partner vessels would be directly affected by the end of the weekend, with 15 re-routed, and the numbers could increase unless the canal was reopened.

According to Lloyd's List, up to 90 percent of the affected cargo is not insured against delays.

How much is the mishap going to cost?

The total cost of the Suez Canal accident is clearly hard to calculate, and analysts say much will depend on how long it takes to sort out.

At present, more than 200 ships are stuck, with several billion dollars worth of goods on board.

'Could not have come at a worse time'

The coronavirus pandemic has already brought unprecedented pressure to bear on global supply chains, so the grounding of a giant container ship "could not have come at a worse time for one of the world’s busiest manmade waterways", noted Jonathan Owens, a logistics specialist at the University of Salford Business School.

The total value of goods that are now blocked or will have to be shipped along an alternative route varies according to how it is estimated.

Owens says the equivalent of $3.0 billion worth of merchandise normally passes through the canal each day.

Lloyd's List, a British maritime shipping publication, says daily traffic in both directions is worth around $9.6 billion.

$£?? Anybody's guess

Given the large number of companies affected, directly and indirectly, it is impossible at this point to quantify the value of the merchandise being held up, according to Moody's analyst Daniel Harlid.

And just because something is delayed does not mean it has been lost, notes Jai Sharma, a maritime transport lawyer at Clyde and Co.

The final impact on companies, and possible chain reactions still to come, cannot be calculated now and will depend in part on the level of stocks in hand, he says.

Plan B for crude

And while the blockage has been cited as a factor in higher oil prices, that sector could in fact be affected less than others, because only around 1.74 million barrels of crude pass each day through the canal.

Eighty percent of Middle Eastern oil headed for Europe, which not a lot, to begin with, is pumped through the Sumed pipeline from the Red Sea to the Mediterranean near Alexandria, says Paola Rodriguez Masiu at Rystad Energy.

The pipeline currently has the capacity to spare, she notes.

Slow boat to Rotterdam?

Transporters can now either wait for the 200,000-tonne ship to float free, which could take days or weeks, or sail around the southern tip of Africa.

Shipping giants Maersk and Hapaq-Lloyd are seriously considering the second option.

That is likely to cost several hundred thousand dollars in extra fuel, raising shipping costs by 15-20 percent according to Plamen Matzkoff, an analyst at VesselsValue.

Lawyer's are lining up

In addition, up to 90 percent of shipments are not insured against delays, Lloyd's List points out.

It quoted sector specialists as saying that lawyers would likely be kept busy arguing who should pay the bill.

As for easing the ship from its new berth, the cost could run to several million dollars, Sharma estimates, especially if containers have to be unloaded from it first.

But transporters' insurance policies are often underwritten by several companies, Moody's analyst Soichiro Makimoto says, so that tab at least is likely to be shared by insurers and re-insurers.

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