Suez Canal Blockage Update
Arlie Sterling, President of Marsoft observes:
Most shipping experts believe that the Evergreen ship now blocking the Suez Canal will be cleared very quickly. But these things are never certain and I asked Marsoft’s experts what they thought the consequences would be if the Suez Canal remained blocked for a month. Their responses were quite varied:
Kevin Hazel didn’t see much impact on the bulk market: Although only a small fraction of dry bulk ships pass through the Suez Canal, a prolonged disruption there could add fuel to what is currently a very tight dry bulk market.
Aditya Trivedi felt the impact could be much greater for the tanker market: If the blockage were to last for more than a few days, and if oil cargoes were shipped around the Cape of Good Hope, crude tanker fleet utilization could boost by as much as 3%, which could increase VLCC rates by almost $20,000/day in the current environment.
According to Costas Bardjis the red-hot containership market goes white-hot: A month-long blockage of the Suez Canal will only add fuel to the fire in a red-hot containership market, already plagued by vessel-capacity shortages, supply chain disruptions and extensive port delays. Charter rates, currently on a sharp upward trend, would surge to new highs and so would liner spot freight rates.”
Hauke Kite-Powell felt the impact on the gas tanker market would not be dramatic: Gas tanker rates are likely to get a small bounce from the canal transit delays. But since this is happening at a weak point in the seasonal cycle for LNGCs, and the Suez Canal is not a major transit route for VLGCs, the impact for both markets is likely to be small.
We are monitoring the situation closely. We will be updating the outlook for our clients by the end of the week, in the upcoming eBrief.