The costly aftermath of the Suez Canal blockage


The other day, talking about our supply chain and its current problems, I said, “the one word that describes our supply lines is ‘fragile’.”  That’s been illustrated by the complications flowing from the recent blockage of the Suez Canal – a blockage that lasted for less than a week, but is having huge international logistics ramifications.

Peter Sundara, VP global ocean product at Hong Kong’s LF Logistics, said the week-long Suez blockage aggravated already stretched container supply chains.

“Even though the canal is now open, it’s going to have a tremendous ripple effect,” he told The Loadstar.

. . .

“When the vessels leaving Suez get into Europe and the US, we’re going to see a lot of vessel bunching, which will worsen port congestion. All the critical landside assets, like chassis, trucks, rail and barges, are going to be under extreme pressure too, and that’s just imports.”

Indeed, given the congestion in destination markets, Mr Sundara noted, vessels bringing back vitally-needed equipment to Asia would be delayed even further.

“We’re going to face a chronic shortage of containers in China, South-east Asia and the Indian subcontinent, especially India, since the carriers prioritise China first in terms of container distribution, then Asean and India, etc.”

. . .

“This is going to impact all the small and medium-sized customers that depend heavily on online bookings,” Mr Sundara said. “Short-term and spot rates are likely to be impacted across the board.”

He said all carriers were revising their sailing schedules which, in some cases, were missing from their websites.

. . .

“If you can’t find the sailing schedules you can’t make a booking,” he explained. “Bookings were already taking up to a week, and now I believe it could take up to two weeks just for the carriers to confirm the space and release a container … It’s going to be worse, because all the vessels returning from Europe and the US will be coming and going at the same time,” said Mr Sundara.

There’s more at the link.

As if to emphasize the point, Maersk – one of the biggest shipping lines in the world – has warned its customers of coming disruptions.

The next challenge is to get the services back on schedule, as we have near 50 vessels delayed for a full week or more due to the Suez blockage, either waiting at the Canal or being redirected South of Africa.

When the delayed vessels start hitting the next load ports in both Asia and Europe, we cannot avoid a significant impact on our equipment availability and capacity availability in the coming period. We urge our customers not to think that the situation is resolved and advise you to prioritise the most urgent/critical goods to be shipped first due to the foreseeable limitations in the weeks to come.

Again, more at the link.

Put the pieces together, looking at them from the point of view of US importers and consumers, and here are the elements that have all come together to create a tsunami of difficulties.

  • Major US West Coast ports are already congested, with dozens of the world’s largest container vessels anchored outside, waiting for berths to open up.  While they’re anchored there, they can’t be unloading, or loading empty containers to take back to China, or doing anything productive – including make more voyages.  Essentially, they’re subtracted from the available world shipping fleet while they’re waiting.
  • The chaos in and around the Suez Canal merely adds to the problem.  Scores of ships had to wait at anchor at either end of the canal while it was cleared.  Some are still waiting to go through.  Others were stuck in the Bitter Lakes, halfway through the canal, unable to go forward or back until the situation was resolved.  They, too, were effectively taken out of the world’s shipping fleet while they were waiting.  More were diverted around the Cape of Good Hope, which will add at least two weeks to their voyages (often more), and delay their arrival at their destinations.
  • When the delayed ships arrive at their destinations, they’re likely to do so in a very short time period, not spread out as they would have been without the interruption to their journeys.  That’s going to overstrain ports and cargo handling facilities, which must suddenly deal with an influx several times higher than they were designed to handle.  Expect confusion in distribution channels beyond those ports, too (e.g. train and road shipment of containers), as they, too, will be overloaded in the short term.  Those factors, in turn, will affect how much return trade they can handle from their own factories and producers, taking it back to the same ports for export.
  • All of the delayed ships had been scheduled to pick up more cargoes in the near future.  All of those cargoes must now also be delayed or deferred, impacting factories that can’t move their production to their customers, and/or can’t get more raw materials and parts to produce more goods.  Those who’d ordered the goods have had to pay for them, but now can’t sell them to their customers thanks to their non-arrival.  That’s likely to produce a “cash crunch” for many companies, including some of the largest distributors and retailers.  (An example:  yesterday I talked with a friend who’s the appliance purchasing manager for a major US retailer.  He says a massive gap is developing in their supply pipeline between appliances being received from overseas, and those being delivered to local stores.  He reckons that for the next month or two, they’re going to be under-stocked in most of their stores thanks to shipping delays alone – and that means consumers won’t find the selection and pricing they’re used to seeing.  He expects there to be so much demand for their limited stock that their prices will almost certainly go up.)
  • Because of the “ripple effect” of too many goods chasing too few ships available, any and every imported item is likely to cost more, thanks to shipping surcharges.  The increased costs will come from both manufacturers and distributors (who have to pay more to move the goods) and from shipping lines, who are making hay while the sun shines and charging their customers a lot more to move their containers.  Inflation will increase as a result of these pressures.  T-shirts, jeans, appliances, power tools, automotive spares, you name it – they’re all going to feel the pressure, because approximately one-fifth of US consumer spending is on imported goods.  The industrial and manufacturing economy will be similarly affected.

And all of that is because one ship got stuck across one canal.  That’s over 10% of the world’s maritime trade blocked for the duration, plus another 10% or so seriously inconvenienced by the ripple effects of the incident.

I daresay strategists around the world are eyeing the resulting chaos, and thinking deeply.  If rogue nations (e.g. Iran, North Korea) want to cause chaos, or terrorist movements (e.g. Al Qaeda, ISIS) are looking for a vulnerable point to attack, they’ve just been given a very good example of how to disrupt the world’s economy at very low cost.  Imagine if a big ship were deliberately sunk across the Suez Canal, or in each lock basin of the Panama Canal.  Between them, they handle up to a quarter of all world shipping.  There’d be chaos for months.

Fragile supply chains, indeed!



  1. There would be chaos if a ship is sunk in one of the canals. I think there would also be a massive retaliation by all nations put in jeopardy by that happening.

  2. The ruling class seems to like fragility.
    Consider the push to mandate all-electric kitchens, as well as all-electric cars. And, of course, all-electric heating. Sure, let's make the basics of life fully dependent on the electrical grid, while mandating use of unreliable sources of electricity and preventing the upgrades and maintenance needed to keep the grid itself reliable. (I'm thinking California more than Texas here.)

  3. HEHEHEH I don't know what you have done…..I re-posted this article on my face book page….and they covered it with a gray screen, questioning the "facts" of this article!!!!

  4. The canal was closed from 1967 to 1975. How did world trade handle that?

    Businesses have gotten too used to "just-in-time" shipping. Will they start adding safety margins, or is the prospect of making slightly less money this quarter too daunting?

  5. This is a barometer of economic activity and suggests pretty strongly that economies are coming out of the lockdown recession. Things were very different a year ago.

  6. Well, in the 1967-75 period, globalism had not yet arrived. So the supply and manufacturing chains had not been subjected to Ricardian "comparative advantage" China was just recovering from the cultural revolution and not even "open for business". The offshore/outsource response to the energy price shocks of 1973 and 1979 had not even been formulated. So, no, the closure during the Israeli/Egyptian standoff, while inconvenient, wasn't either unexpected or traumatic.
    Bot as Peter notes, supply chains are fragile, and JIT can become SOL in a moment.

  7. I think you wrote an article a year ago about the lack of shipping traffic and empty containers being a sign of negative growth,
    + 1 with Borepatch.


  8. A friend who is a receiving manager at a Home Depot in OK says they are rationing drywall and drywall mud. Big purchasers are vetted to be certain they aren't flippers looking to profit on shortages, and small purchasers are limited in the number of sheets they can buy.

    No idea why.

    Just a data point.

    also, I get a bunch of trade magazines and they ALL are talking about supply chain issues with something like 80% of US businesses affected by disruptions, and consequently looking at moving some of their supply chain closer to home. Unfortunately, the ability and capacity no longer exists and will have to be recreated or renewed.

    And consider, if there is a crunch on current shipments, how could they possibly get some extra to put aside for later? they're stuck for the time being.


    Wrt falling shipping rates and volumes, that did happen. It WAS an indicator of slowing economic activity. Then a bunch of shippers went bankrupt, including US trucking firms. Now there isn't enough to meet needs, even reduced as they are. It doesn't mean the observation was wrong, only that over time conditions change as a result of those previous activities.


  9. Nick Flandrey: "… Home Depot in OK says they are rationing drywall and drywall mud."
    Hm. Maybe there's a lot of drywall replacement going on in some nearby state? Just a wild guess.
    Maybe also issues on the supply side, but I wouldn't be at all surprised if there's been a recent spike in demand.

  10. Every construction guy I talk with tells me supplies have doubled and tripled in price when they can get them at all. An electrical contractor named several vendors that were raising prices on their products 10% today. Demand, supply, restricted shipping, oceans of cash. I'm waiting for some PhD to tell me it isn't real.

  11. As @SL sail above, what would happen if a ship sunk in the canals. Suez, Panama, etc.

    If some bright terrorist figured out how to buy a set of sixth-hand cargo ships, one stop away from the shipbreakers on the beaches of Alang, India, fill their holds with gravel (anything heavy and loose), and then plant scuttling charges alone the keel, they'd have global commerce killers.

    Seen or heard of the wreck of the MV Golden Ray. 660ft long, went over sideways in September of 2019, and they're having to cut it apart in place. It took over a year just to start. Now, imagine if on the same day, a bunch of ships go into canals, narrow channels leading to dockyard berths, any kind of narrow, shallow waterway leading to a harbor… and they slide sideways, break the spines of the ships and let the water in. You can't refloat them because they are structurally unsound. If you try to cut them apart, the loose wet load falls out and remains in place. Unloading them before cutting them up means essentially dredging the inside of the ship.

    In any event… there's only so much equipment in the world available for salvaging large wrecks.

    Also, there's a worldwide surplus of cargo ships right now due to pandemic shutdowns, so now the right time for a nefarious plotter to pick up some rustbuckets with fuel-inefficient engines that someone is trying to get off their hands. Who needs a nuke program when you can simply make a port city unusable for a couple years for way less money?

  12. Talking of fragile supply chains, there are a number of small (specialty) manufacturers that are critical to either making parts/subassemblies or making the equipment to make parts that are either bankrupt, lockeddown and unable to make thngs or both.

    What this means is that when Walmart or Ford or someone places an order their subcontractors and subsubs may discover there's no one who can actually make it.

    I've discovered that cycle wheels (and hence bicycles as a whole) are suffering from this exact problem as some key components for good quality wheels were usually ordered from Mavic? in France which is either bankrupt of not able to work due to European lockdowns.

  13. Um..

    Just saying that I'm chalking this one up to a test run. The way this ship got wedged in when there's been desert winds going for generations and all the rest of the ships have been fine? Comeon. This was a test run or set up so that someone somewhere just made or is making a millions. Think about it guys? I mean has the thought not crossed anyone's mind this was a deliberate deal either with a terrorist or a fiscal terrorist at the heart of it? Or someone figured this was the way to make millions as I said?

  14. Jester said…


    Just saying that I'm chalking this one up to a test run.

    I lean towards cockup rather than conspiracy in this case. But it has certainly alerted any number of groups to things that could be done next time.

    There's a fascinating video of the ship's movements in the time leading up to the final moment on the Bork of Feces –

    Basically the ship seems to have done a bunch of (over)corrections to wind gusts and the flow of water under/next to the ship before eventually screwing the pooch too much to recover

  15. "Never ascribe to malice what is easiest explained by sheer incompetence.

    This time.

    Number of groups who were taking notes for next time: Beyond counting.

    A dozen such problems in the right places could bring sea trade largely to a standstill, for months, in a multitude of places.

    And unlike nukes, there's no non-proliferation treaty on half-@$$ed rustbucket hulls. 2-4 in Suez and 1@ for both ends of the Panama Canal both ways, alone, would be chaos.

    Do the same thing in a few other key ports, and it's better and more destructive than nuclear warfare.

    And no one is going to be retaliating against a few dozen ghosts who slip over the side in a Zodiac and beat feet back to HQ, to have a hearty chuckle over the New Normal the Day After.

    Were they to also pre-plan and slowly amass a small fleet of smaller hulls to pick up the slack, the consequence-free profits would be both astonishing, and entirely legal.

    Control of sea trade has always been the hallmark of empire-building.

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