While MV Ever Given, the stranded container ship blocking the Suez Canal, has been dislodged and the traffic has resumed, shipping tariffs are expected to remain elevated, market experts and shipping analysts said.
The Suez Canal cargo operations have restarted and 369 ships that are stuck on both sides of the canal will be cleared as soon as possible, a senior official of a transit service provider in the region told Moneycontrol.
However, shipping tariffs are expected to remain high as the Suez Canal will take a few days to completely restart operations and ships that have been diverted already will need to be re-scheduled into the international shipping timelines, analysts said.
“Trading volumes are expected to remain low for the next week as a number of ships have been re-directed. The Suez Canal port authorities will also have to come up with new timelines for upcoming ships,” a Mumbai-based shipping analyst said.
“Many companies are likely to get into bidding wars to extradite their export and import cargo and this is likely to lead to higher tariff rates,” the analyst pointed out.
The MV Ever Given mega container got wedged in the Suez Canal on March 23 in a single-lane stretch of the canal.
“The 43 vessels presently stuck in the Great Bitter Lakes will resume transit, clearing canal from Suez end as soon as possible. At the same time, 45 vessels from Port Said will transit with the Southbound convoy. From Suez Port, 45 vessels will transit canal with the North Bound convoy direct to Port Said,” the Suez Canal Authority said in a letter seen by Moneycontrol.
As per estimates, around 12 percent of the global trade passes through the 193-km long canal, which is the shortest sea link between Asia and Europe. According to media reports, around 280 ships are in a maritime traffic jam on both sides of the canal.
In 2020, a total of 18,829 ships passed through the canal carrying around 1.17 billion tonnes of cargo.
The MV Ever Given getting stuck on the Suez Canal is expected to create a seven to ten-day backlog in commercial shipping schedules.Furthermore, 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, tariff rates are likely to remain high.