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Australian supply chains to remain unscathed in Suez Canal blockage

The Suez Canal blockage will have little effect on Australian supply chains, experts say.

The canal, which was blocked by a 400-metre-long container ship, the Ever Green, on 16 March, remains stuck diagonally across the single lane stretch in the south end of the canal.

Thankfully, Flavio Macau, Vice President at Australasian Supply Chain Institutes’ (ASCI)
WA Chapter and supply chain management expert at Edith Cowan University, said the impact on Australian supply chains would be minimal.

“The Suez Canal is mostly used for commerce between Asia and Europe, so in Europe you may see a shortage of products like cars, and in China, a shortage of oil,” he said.

“The shortage of the oil impact in Australia shouldn’t be considerable because it’s not one of our established routes.

“Our main commercial partner is China and the United States, and neither of them require the use of that canal.”

An excavator tries to dig out the keel of the Ever Given. Picture: Suez Canal Authority

If anything, Flavio said there may be disruptions with companies doing business with certain parts of Europe, which may include delays in ports and a shortage of material products.

“Even if it takes one week the impact on global commerce will be around .1 per cent – we have to remember this is not a collapse, this is a loss of efficiency,” he said.

Kirk Coningham, CEO at Australian Logistics Council agreed the impact on Australian supply chains wouldn’t be significant.

“Global supply chains are intricately connected so there will likely be some ripple effect from this, not the least of which is the potential impact on global fuel supply and costs,” he said.

ASCI’s Flavio said it was anyone’s guess when the ship would be freed, but he estimated it would most likely be before 30 March.

“The weather conditions will be improving in the coming days so I think they have a good chance to free the ship in the next three to four days,” Flavio said.

“If it doesn’t happen by then, we might come to the conclusion it might be a long, long wait – we will be in trouble.”

Tug boats are trying to dislodge the giant cargo ship so traffic can continue through the canal. Picture: Suez Canal Authority

Hundreds of large container ships have been backed up at either end of the canal, waiting to get through. These vessels face delays of two to three days if the Ever Green is freed soon. Otherwise, they may be stuck outside the canal for five to seven days.

Flavio advised any ships heading out from Australia that need to pass through the canal to go south around Africa instead – adding seven to 10 days to the trip.

He said COVID-19 had put many companies in good stead to deal with the disruptions due to the blockage.

“Those that could replenish and re-evaluate their inventories due to COVID-19 should be okay during this time,” he said.

“Companies have a bit more inventory now because of the pandemic. It’s like a strained ankle, and not a broken leg.”

To prevent a similar incident from occurring in the future, Flavio suggested the Suez Canal Authority should control the volume and type of ships allowed to pass through the canal based on meteorological conditions.

Hundreds of boats wait on either side of the canal to pass through. Picture: Marine Vessel Traffic

A sandstorm and high winds up to 50km/h are thought to have resulted in the stranded ship.

So far, eight large tugboats have been used to try and dislodge the Ever Green, the Suez Canal Authority said in a statement.

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