Suez blockage to elevate already high shipping tariffs for next 2 weeks

The already elevated tariffs are likely to rise even more over the next two weeks after a massive cargo ship turned sideways in Egypt's Suez Canal, one of the world’s busiest maritime channels, blocking traffic in a crucial East-West waterway for global shipping, analysts said.

Yaruqhullah Khan

March 26, 2021 / 07:50 PM IST

Ships in Aberdeen Harbor, Scotland, April 3, 2020. For decades, the oil rigs rising out of the North Sea off Scotland provided Britain with hundreds of thousands of jobs in a thriving industry and billions in tax revenue, but now much of that seems a memory with the collapse in oil prices from the coronavirus pandemic, coupled with infections aboard the drilling rigs, are imperiling the vast industry that sprawls across the waters off Scotland and Norway. (Gregor Schmatz/The New York Times)

Shipping tariffs rates, which have seen a spike in the last month and a half, are expected to remain elevated for the next two-three months, as demand for shipping containers is expected to remain high on the back of pent-up demand as global economies open up from the aftermath of the COVID-19 pandemic.

These already elevated tariffs are likely to rise even more over the next two weeks after a massive cargo ship turned sideways in Egypt's Suez Canal, one of the world’s busiest maritime channels, blocking traffic in a crucial East-West waterway for global shipping, analysts said.

“Depending on how long it takes to free the Ever Given, the blocking of the Suez Canal will lead to higher charter rates as ships travelling from Asia or Australia to Europe have to take a longer route, thereby reducing the capacity on these route at a time when demand is very high,” said Anand Sharma, Director at Mantrana Maritime Advisory Pvt Ltd.

The Baltic Dry Index, a key indicator of shipping rates, is an index of average prices paid for the transport of dry bulk materials across more than 20 routes. The index is often viewed as a leading indicator of economic activity because changes in the index reflect supply and demand for important materials used in manufacturing.

It has risen as much as 60.6 percent since February 2, 2021 and peaked at around $2,319 on March 22, 2021.

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