Suez Canal shutdown by Ever Given highlights one other weak hyperlink in international provide chain


The stranded container ship Ever Given, one of the largest container ships in the world, can be seen after landing in Egypt’s Suez Canal on March 26, 2021.

Suez Canal Authority | Reuters

The massive container ship Ever Given, which is moored in the Suez Canal, offers a vivid picture of a world economy whose global supply chains have already been disrupted.

The stranded Ever Given has smothered one of the most critical choke points in the world economy. The Suez Canal is the shortcut between East and West and shortens the journey between Asia and Europe by 3,000 miles.

For this reason it has long been at the top of the list of “chokepoints” in world trade – at risk from disruption as a result of war or terrorism. And for a good reason. It was shut down twice by war – the 1956 Suez Crisis and the 1967 Arab-Israeli War, which closed the canal for eight years.

While there have been brief disruptions to shipping before that, there has been nothing like the current blockade that is disrupting billions in trade. In the past few decades, the Suez Canal has been most important as a critical channel for the Middle East’s oil supply to the west.

During the Suez Crisis of 1956, the British Prime Minister feared that Europe would be “strangled to death” without oil from the Middle East. But it is now vital not only for tankers bringing oil from the Middle East to Europe and North America, but also as the number one route for container ships.

Containerization wasn’t born until 1956, the same year as the Suez Crisis, when the first container ship was loaded in the port of Newark in New Jersey. In terms of tonnage today, 50% is container ships and 18% is oil.

This partly reflects the changing pattern of the global oil trade, with more oil now flowing into Asia from the Middle East. The canal is also important for transporting liquefied natural gas to the west.

And the Ever Given was on the standard run for container ships, hauling around 20,000 containers – metal boxes – that were likely to hold everything from running shoes and sweatshirts and furniture to laptops, smartphones and solar panels. It left Shanghai, the largest container port in the world, on the way to Rotterdam, from where the containers would be distributed throughout Europe.

What I realized while writing The New Map was not only how containerization has become the backbone of global trade, but also how critical it has become to China’s economic progress and its role as the “workshop of the world”. China’s rapid economic growth would not have been possible without the container fleets to move its goods to global markets at very little additional cost.

Seven of the ten largest container ports in the world are Chinese – Shanghai is the largest – and China typically accounts for over 40% of global container shipments.

The world’s dependence on containerization only became clear when the 2020 coronavirus temporarily shut down a large part of world trade and the effects can still be felt today. But now in 2021, the Suez Canal chokehold shows clearly how closely the global economy is linked, despite all the tensions among the governments.

In search of efficiency, container ships have grown to mega-sizes. At a quarter mile, the length of Ever Given is 25% greater than the height of the Eiffel Tower. While the magnitude was critical to facilitating world trade, the magnitude represented by Ever Given has reached levels that disrupt world trade, at least in the next few days. Since it remains stranded on the canal, it is “too big to pass”.

Daniel Yergin, vice chairman of IHS Markit, is a Pulitzer Prize-winning writer. His latest book is
“The new map: energy, climate and the clash of nations.”