How a Desert Wind Blew $10 Billion of Global Trade Off Course on the Suez Canal
Published Date: 3/27/2021
Source: Bloomberg Quicktake: Now
The forecast for Tuesday, March 23, showed wind gusts of more than 40 miles per hour and sand storms sweeping through northern Egypt. Indeed, such weather is common in the Sinai desert at this time of year. The Suez Canal—one of the most critical, yet precarious waterways on the planet—remained open. Ships were starting to form the daily convoy as the gusts picked up. One of the world’s biggest container vessels, the Ever Given, joined it. The decision would reverberate globally within hours. By 7:40 a.m. local time, the megaship—loaded with containers that would stretch more than 120 kilometers (75 miles) end to end and carrying everything from frozen fish to furniture—was stuck. Its grounding would not only lay bare the intricacies of navigating a man-made trench of water in a vessel the size of the Eiffel Tower, but also the fragility of a global network of markets and economies that takes for granted the flow of goods through it. Based on tracking data and dozens of interviews with people in the industry, what’s known is that the Ever Given started heading through the 300 meter-wide canal while at least one other ship decided to hold off due to the high winds. The Ever Given also didn’t employ tug boats, according to two people with knowledge of the situation, while the two slightly smaller container ships immediately ahead did. Then there was the issue of how fast it was going. When the ship began to move toward the sand, it appeared to speed up, perhaps to correct itself, though it was too late and it almost collided with the bank. That served to then wedge the steel hull more deeply into the side of the canal. The gusts also would have compounded what’s considered by captains as one of the toughest water crossings in the world. “You’re in for some white-knuckle rides,” said Andrew Kinsey, a former captain who has navigated a 300-meter cargo ship through the Suez and is now a senior marine risk consultant at Allianz Global Corporate & Specialty. “It’s such a small canal, the winds are very rough and you have a really small margin for error and big consequences if errors happen.” It wasn’t a situation where you couldn’t sail, even though wind was strong enough to close nearby ports. Some vessels used tugs or other assistance, others just passed through without incident. At least one ship decided to delay the trip through the canal, though. The day before the Ever Given grounded, the Rasheeda was among the ships approaching the canal from the southern end. Mindful of the dangers of the coming sandstorm and laden with liquefied natural gas from Qatar, the captain decided not to enter the canal after discussion with other officials at Royal Dutch Shell Plc, which manages the ship, according to two people familiar with the situation. The Suez Canal Authority said a lack of visibility in adverse weather led to the ship losing control and drifting. It hasn’t commented further. Taiwan-based Evergreen Line, the time charterer of the vessel, said by email the Ever Given “was grounded accidentally after deviating from its course due to suspected sudden strong wind.” The manager of the ship, Benhard Schulte Shipmanagement, said initial investigations suggest the accident was due to the wind. An extensive investigation involving multi-agencies and parties is ongoing. It will include interviews with pilots onboard and all bridge personnel and other crew, said a company spokesman. Meanwhile, the canal remains blocked and the latest reports from people familiar with rescue efforts suggest that will take until at least Wednesday. A conduit for 12% of the world’s trade, an average of 50 ships pass through Suez every day in convoys that start in the early morning. The Ever Given started its journey soon after daybreak and picked up two local pilots from the Suez Canal Authority. They come onboard to supervise ships making the journey through the waterway that can take up to 12 hours. But the authority’s rules of navigation clearly spell out that the captain, shipowners and charterers remain responsible for accidents. Subscribe to our YouTube channel: https://bit.ly/2TwO8Gm Bloomberg Quicktake brings you live global news and original shows spanning business, technology, politics and culture. Make sense of the stories changing your business and your world. To watch complete coverage on Bloomberg Quicktake 24/7, visit http://www.bloomberg.com/qt/live, or watch on Apple TV, Roku, Samsung Smart TV, Fire TV and Android TV on the Bloomberg app. Have a story to tell? Fill out this survey for a chance to have it featured on Bloomberg Quicktake: https://cor.us/surveys/27AF30 Connect with us on… YouTube: https://www.youtube.com/user/Bloomberg Breaking News on YouTube: https://www.youtube.com/c/BloombergQuickTakeNews Twitter: https://twitter.com/quicktake Facebook: https://www.facebook.com/quicktake Instagram: https://www.instagram.com/quicktake