Harshit Rao
Madan Mohan Malviya University of Technology, Gorakhpur
The mainstay of world commerce and the global economy is maritime transport. Maritime shipping accounts for 76% of all international trade. This percentage rises to 90% of all foreign trade. India has 14,500 kilometers of navigable channels, seaports, and other commercially navigable waterways.
Shipping helps everyone on the planet, but few people realize it. We transport food, machinery, and pharmaceuticals. As the world’s population continues to increase, especially in developing countries, low-cost and effective maritime transportation plays an increasingly important role in growth and development. Shipping helps ensure that the benefits of trade and commerce are more evenly spread. A nation depends on maritime commerce, to sell what it has and purchase what it needs. because no country is fully self-sufficient. Much of what we use and consume in our everyday lives either has been or will be transported by sea, in the form of raw materials, components, or finished articles.
Our nation’s ports are the lifelines of our economy. In 2019, foreign trades through Indian ports were valued at 154 billion rupees and $ 1.5 trillion through U.S. ports.
A 1,300-foot container ship called Ever Given disrupted traffic at Egypt’s Suez Canal entrance on March 23, 2021. After six frantic days, it was eventually liberated, but the blockade had leftover 200 ships stranded at either end of the canal. The ship got wedged on the east bank and stuck diagonally due to high tides and waves. The salvage firm in charge of the ship’s rescue referred to it as a “beached whale” because the Golden-class container ship was a massive weight on the sand. This has put much more strain on world commerce at a time when it was still under strain due to the COVID-19 pandemic’s economic effects. The canal runs via Egypt, linking ports from the Mediterranean Sea to the Indian Ocean through the Red Sea port of Suez. The passage allows for more convenient shipping between Europe and Asia, removing the need to travel across Africa and shortening journey times by days or weeks.
The canal is the world’s longest without locks, which join water bodies at differing altitudes. With no locks to interrupt traffic, the transit time from end to end averages about 13 to 15 hours.
On March 25, Shoei Kisen, the owner of Ever Given, issued a public apology as the blockade slowed the flow of billions of dollars in trade goods. Per day, the canal transports about one million barrels of crude oil, 8% of liquefied natural gas, and 12.5 percent of global commerce. This equates to a deficit of goods of about $8.4 billion per day or around $350 million per hour. Since the Suez Canal is a vital trading path between the East and the West, this will have a significant impact on the global trade market for weeks, if not months.
Even though the ship is now free, and trade has resumed, there is a massive log jam of vessels trying to pass. The level of disturbance cascaded every 24 hours over six days as more vessels joined the line of transit. There could be congestion at some ports and further aggravation of supply chains that were already reeling from container shortages. As a result, assembly lines could be left idle as ships will not arrive in time.
The owner of the Ever Given is already facing millions of dollars in insurance claims and the cost of emergency salvage services. Egypt’s government, which received $5.61 billion in revenue from canal tolls in 2020, also has a vital interest in routing the Ever Given and reopening the waterway.
Another area of trade loss is the re-routing of some ships that are being asked to travel via the Cape of Good Hope in South Africa, which could see a delay of another eight days. This could potentially add more than $21,000 a day in fuel costs.
The losses continue to rise. According to German insurer Allianz, global trade could witness a reduction in trade growth by 0.2 to 0.4 percent and could cost somewhere between $ 4.8 billion and $ 8.4 billion.
