PORT616 Project

PORT616 Project

PORT 611- International Maritime Transportation March 21st, 2022

Executive Summary

Have you ever wondered what the world would be like without global trade? How would we get certain goods or how would the economy sustain? Over the last 20 years,

global trade has increased by nearly 6%, resulting in economic growth, development

and a decrease in poverty (Global trade liberalization and the developing countries — an

IMF issues brief). How exactly does the world trade? 90% of goods traded are traded

over the sea, making sea shipping single-handedly the most important part of global

trade (Ocean Shipping and shipbuilding). It is stated that shipping contributes to 11

billion tons of goods being transported in a given year (Shipping and world trade:

Driving prosperity 2021). It’s no surprise that global pandemics have an extensive effect

on global trade, but what is surprising is when a massive cargo ship gets lodged in the

Suez Canal and the effects that has on global trade. We will dive into the history of the

Suez Canal, infrastructure, safety, the importance of the canal and the disruption

caused to international shipping when the Ever Given was lodged in the Suez Canal.

The Suez Canal is a man-made canal that connects the Mediterranean and the

Red Sea, allowing for the shortest route of transportation between Europe and the

countries surrounding the Indian and Pacific Ocean. The canal separates the continents

of Asia and Africa, making it one of the most vital canals to maritime transportation

(About Suez Canal). The Egyptian Pharaoh Senausert III is considered to be the man

who came up with the idea to connect the Red Sea to the Mediterranean. However, it’s

believed that the real history of the Suez Canal begins with the First Concession.

According to the Suez Canal Authority, digging for the canal began on April 25th, 1859

in the city of “Al-Farama” which is now called Port Said. It took roughly 10.5 years of

digging for the canal to open on November 17th, 1869, making it a crucial artery to

international shipping. The canal has been open and closed multiple times in its

existence, however, it has been open for navigation since June of 1975 (Canal History).

The Suez Canal has been through multiple expansions/renovations since its inception in 1859.

These expansions have allowed the canal to accommodate larger ships and increased traffic.

During the most recent renovation in 2015, an additional 22 mile long canal was created to help

the flow of traffic in both directions

(https://earthobservatory.nasa.gov/images/87948/the-new-suez-canal#:~:text=A%20key%20shi

pping%20route%20through,just%20one%20year%20of%20construction.). The way the canal

stands now, it is approximately 120 miles long, 672.5 feet wide, maximum water depth is 24

feet, allows 66 feet of the draft of the ship and has a max deadweight tonnage of 240,000. The

Suez Canal Authority claims that once the canal reaches 72 feet in depth, it will be able to

accept approximately 99% of all shipping methods, to include most bulk and petroleum ships

(https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/CanalCharacteristics.aspx).

The canal is also implementing the next renovation to accommodate new container ships

expected in the future.

In order to operate a canal of this size, it is crucial to have the appropriate infrastructure in

place. Infrastructure is a term used to describe all the elements in place to facilitate

communication, transportation and business exchanges. One of the most important parts of the

Suez Canal’s infrastructure is the depth of the water. In 2015, the canal completed an $8.5

billion overhaul, deepening the waterway, adding the additional 22 mile long canal and

increasing draft height. This project estimated that the canal will see 97 ships transit in one day.

(https://allhands.navy.mil/Stories/Display-Story/Article/1840351/the-suez-canal/). The depth has

https://earthobservatory.nasa.gov/images/87948/the-new-suez-canal#:~:text=A%20key%20shipping%20route%20through,just%20one%20year%20of%20construction
https://earthobservatory.nasa.gov/images/87948/the-new-suez-canal#:~:text=A%20key%20shipping%20route%20through,just%20one%20year%20of%20construction
https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/CanalCharacteristics.aspx
https://allhands.navy.mil/Stories/Display-Story/Article/1840351/the-suez-canal/

increased from an original 8 meters to 24 meters. By implementing this change, the canal is

able to serve larger and heavier ships. With the increase in maximum depth of the water, the

draft height has also tripled. In 1869, the maximum draft height was 22 feet. Now the canal has

a maximum draft height of 66 feet

(https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/CanalCharacteristics.aspx). In

May of 2021, the Egyptian government has approved an expansion plan that will broaden the

southern portion of the canal, where the Ever Given was beached. This portion of the canal will

be widened from 30 meters to 40 meters and deepened to 72 feet. In addition, the 22 mile long

canal will be extended by roughly 6.2 miles

(https://www.ship-technology.com/news/egypt-suez-canal-expansion-plan/#:~:text=SCA’s%20pl

an%20to%20extend%20the,to%20move%20through%20the%20canal.). These upgrades will

encourage more ships to use the Suez Canal and increase global trade.

The Suez Canal has implemented other parts of infrastructure to include a bridge called “The

Friendship Bridge”. The bridge was built high enough to allow ships to pass underneath without

any hassle. The Japanese government assisted in paying for the bridge as it connects Africa to

Asia (Suez Canal Bridge). In 1983, a tunnel was built under the canal to facilitate traffic for

automobiles. It was later found that there was a leak that the Japanese government repaired

(Rehabilitation of the Ahmed Hamdi Tunnel). In 2017, the Egyptian government approved

projects for 4 new tunnels to be made underneath this global trade artery. The tunnels simplify

trade, facilitate traffic between the two canal cities and encourage economic development in the

region (https://www.tunnel-online.info/en/artikel/tunnel__3116094.html). These tunnels were

opened in May of 2019 (https://www.britannica.com/topic/Suez-Canal/The-economy).

https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/CanalCharacteristics.aspx
https://www.ship-technology.com/news/egypt-suez-canal-expansion-plan/#:~:text=SCA’s%20plan%20to%20extend%20the,to%20move%20through%20the%20canal
https://www.ship-technology.com/news/egypt-suez-canal-expansion-plan/#:~:text=SCA’s%20plan%20to%20extend%20the,to%20move%20through%20the%20canal
https://www.tunnel-online.info/en/artikel/tunnel__3116094.html
https://www.britannica.com/topic/Suez-Canal/The-economy

With such importance on the Suez Canal, we must consider the safety of the canal. Between the

years of 2010 and 2019, there were 75 incident reports. More than a third of these incident

reports were container ships. This should come to no surprise, considering the amount of

container ships the canal services versus other types of ships. The most common cause of

shipping incidents in the Suez Canal can be attributed to groundings, such as the Ever Given in

2021. There have been a total of 25 groundings in the last 10 years in the canal, resulting in

nearly a third of the incidents in the canal altogether. Other incidents include collision and

contact

(https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/suez-canal-lessons-learned.

html).

What is the significance of the Suez Canal? As of April 2021, roughly 12% of global trade

transits through the canal. Nearly 30% of all container traffic transits the Suez Canal carrying

over $1 trillion worth of goods a year

(https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-middle-east/the-importan

ce-of-the-suez-canal-to-global-trade-18-april-2021/). In 2020, during the COVID-19 pandemic,

roughly 19,000 ships passed through the Suez Canal, resulting in around 50 ships per day. With

this volume of container ships, it is estimated that the ships carried $3-9 billion USD worth of

cargo. In 2019, it was estimated to be around $1 billion. The Suez Canal is a central hub that is

able to route energy, commodities, componentry and consumer goods from countries located in

and around the Indian Ocean, to the Mediterranean. It’s estimated that the canal enables shipment

of 8% of the world’s natural gas and 7-10% oil, resulting in nearly 1 million barrels of oil to

transit through the canal daily. With the plans in place for the future, the canal hopes to open

transit to 97 ships per day versus the 50 they are transiting now

https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/suez-canal-lessons-learned.html
https://www.agcs.allianz.com/news-and-insights/expert-risk-articles/suez-canal-lessons-learned.html
https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-middle-east/the-importance-of-the-suez-canal-to-global-trade-18-april-2021/
https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-middle-east/the-importance-of-the-suez-canal-to-global-trade-18-april-2021/

(https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-middle-east/the-importan

ce-of-the-suez-canal-to-global-trade-18-april-2021/).

Now, considering how important global trade is, what is the worst that can happen to the Suez

Canal? A blockage. On March 23rd, 2021 the vessel named “Ever Given”, operated by

Evergreen Marine, attempted to pass through the Suez Canal during its voyage from Malaysia to

the Netherlands. During its voyage through the canal, the Ever Given encountered strong winds

and a sand storm that essentially threw the ship off course, lodging it into the sides of the canal.

Due to this blockage, ships were forced to either wait it out, or to make alternative route

arrangements. Permission is required from the Suez Canal if a ship is larger than 400 meters. The

Ever Given is 399.94 meters in length, 6 centimeters shy of the limit. The point in which the

Ever Given was lodged was only 275 meters wide. The crew struggled to get the Ever Given

free. The Ever Given weighed roughly 200,000 tons, requiring roughly 30,000 cubic meters of

sand to be dredged around the vessel. With the aid of numerous tugboats, the Ever Given was set

free. The vessel was towed upstream to the Great Bitter Lake to be evaluated for damage (CITE

OUR VIDEO!!! https://www.youtube.com/watch?v=VXjQbIvajoc).

The blockage unfortunately stalled over 370 ships. It is estimated that the blockage cost $9

billion dollars in global trade per day. It was stuck for six days, resulting in approximately $54

billion dollars in global trade

(https://www.matec-conferences.org/articles/matecconf/pdf/2021/08/matecconf_istsml2021_010

19.pdf). The vessel was held in Great Bitter Lake for over three months due to a financial dispute

between the ship’s owners and the Suez Canal Authority (SCA). The SCA demanded $916

https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-middle-east/the-importance-of-the-suez-canal-to-global-trade-18-april-2021/
https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-middle-east/the-importance-of-the-suez-canal-to-global-trade-18-april-2021/
https://www.matec-conferences.org/articles/matecconf/pdf/2021/08/matecconf_istsml2021_01019.pdf
https://www.matec-conferences.org/articles/matecconf/pdf/2021/08/matecconf_istsml2021_01019.pdf

million in compensation for its losses, however, that was lowered to $550 million by the time of

the Ever Given’s release

(https://www.npr.org/2021/07/07/1013840787/the-ever-given-has-set-sail-from-the-suez-canal-m

onths-after-it-blocked-the-wate). With the strain of the COVID-19 pandemic, this was the last

thing the supply chain needed.

Conclusion

https://www.npr.org/2021/07/07/1013840787/the-ever-given-has-set-sail-from-the-suez-canal-months-after-it-blocked-the-wate
https://www.npr.org/2021/07/07/1013840787/the-ever-given-has-set-sail-from-the-suez-canal-months-after-it-blocked-the-wate

Works Cited

About Suez Canal. SCA – About Suez Canal. (n.d.). Retrieved February 20, 2022, from

https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/AboutSuezCanal.a

spx

IMF Staff. (n.d.). Global trade liberalization and the developing countries — an IMF

issues brief. International Monetary Fund. Retrieved February 20, 2022, from

https://www.imf.org/external/np/exr/ib/2001/110801.htm

Ocean Shipping and shipbuilding. OECD. (n.d.). Retrieved February 20, 2022, from

https://www.oecd.org/ocean/topics/ocean-shipping/#:~:text=The%20main%20trans

port%20mode%20for,comes%20with%20opportunities%20and%20challenges

Shipping and world trade: Driving prosperity. International Chamber of Shipping. (2021,

July 9). Retrieved February 20, 2022, from

https://www.ics-shipping.org/shipping-fact/shipping-and-world-trade-driving-prosper

ity/

https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/AboutSuezCanal.aspx
https://www.suezcanal.gov.eg/English/About/SuezCanal/Pages/AboutSuezCanal.aspx
https://www.imf.org/external/np/exr/ib/2001/110801.htm
https://www.oecd.org/ocean/topics/ocean-shipping/#:~:text=The%20main%20transport%20mode%20for,comes%20with%20opportunities%20and%20challenges
https://www.oecd.org/ocean/topics/ocean-shipping/#:~:text=The%20main%20transport%20mode%20for,comes%20with%20opportunities%20and%20challenges
https://www.ics-shipping.org/shipping-fact/shipping-and-world-trade-driving-prosperity/
https://www.ics-shipping.org/shipping-fact/shipping-and-world-trade-driving-prosperity/