If there was any doubt as to just how fragile our global systems of trade and commerce actually are, the ongoing crisis at the Suez canal is irrefutable proof. On just its second day, the crisis has already become a great international emergency with stock markets and oil prices already fluctuating in anticipation of what promises to be a difficult fix. The 400-metre long, 2,00,000-tonne ship Ever Given is firmly lodged in the waterway after strong winds ran it aground. Efforts to get the ship realigned and into the waterway again are on their way but no one quite knows how long the process will take. In its over 150 year history, the canal has never quite faced a challenge as daunting and time-bound as this. And it is definitely time-bound. The Suez canal, by some estimations, carries up to 12 per cent of the global trade volume through its waterways.
Every hour the passage remains blocked, there is an approximate financial loss of USD 400 million. The passage is obviously far more widely known for carrying oil and serves as an important link between Europe and Asia. Some 10 per cent of the world trade in crude oil passes through the canal. As a result of this jam, roughly 10 million barrels of oil are held up on either side of the canal. Already there is plenty of scampering for alternatives as Egyptian canal authorities work towards freeing the ship. The older shipping lanes have been opened up though those lanes were not exactly built keeping the size of modern ships in mind. Several of the shipping companies have also already discussed plans of simply going around Africa as was the case before the canal was first opened. This would add at least one week to the travel time for these ships either way. All the fun memes about a tiny construction dozer trying to free a massive ship aside, there are some serious long term concerns that this grounding has raised. The obvious one is the concern that this could easily happen again. Transit canals like Panama, Suez, Strait of Hormuz all have narrow chokepoints that could easily choke up as massive ships become more common and these few strategic shipping lanes come under more and more frequent use. To compound, the timelines for shipping operation are getting more and more cut throat as operators value the efficiency of profit-making and set ambitious targets that are badly derailed by any such delays. For now, all the authorities and the world can realistically do is wait. The easiest time to lug the massive ship free would be during high tide which could take a few days. Before we conclude, let us take a brief moment to understand just how this affects India. Remember how the Suez carries around 10 per cent of the world trade in crude oil? India is actually the number one importer of oil that passes through the Suez canal with around 500,000 barrels of oil passing through every single day. In light of this information, it should be easy to see why any kind of a hold-up on oil supplies is bad news for India as both shipping and oil prices spike following the canal jam.
What about the future then? Do we have little recourse in such matters and can we only wait for another such incident to happen? Not exactly. There are alternatives but most require a level of change to the current systems of freight shipping that would simply not be possible in the short run. There is a need to invest in modernising these canals which were not built with the size of modern cargo ships in mind. There is also perhaps room for alternative routes to take-off the overwhelming pressure these few routes face. The steadily opening up Arctic passage could be one such route in the future.