AMKBY AP Moller Maersk AS (PK)

By Costas Paris 

Traffic mounted on both sides of the Suez Canal Thursday morning as the critical waterway remained shut whilst Egyptian authorities worked to refloat a grounded tanker.

Tugboats and a dredger resumed work early Thursday to dig out the Ever Given, a 1,300-foot container ship, partially refloat it and move it out of the way. "The refloating drive was suspended overnight," said a senior Egyptian official. "We'll give it another go this morning."

Danish shipping giant A.P. Moller-Maersk A/S told customers it expected a traffic backlog to grow. "The incident continues to create long tailbacks on the waterway, stopping vessels from passing and causing delays," it said in an advisory. Maersk, the world's biggest liner company in terms of capacity, said four of its vessels were stuck in the canal and another three were waiting to enter.

Suez Canal service provider Leth Agencies said Thursday that 70 northbound ships were stuck, along with another 79 southbound ships -- up from about 100 vessels combined -- were waiting late Wednesday. The World Shipping Council, a shipping trade body, said a maximum 106 ships can cross the waterway a day, and warned it could take a number of days to clear the queue of ships once the Ever Given is pushed out of the way.

The Suez Canal is a vital trade route for tankers carrying oil and natural gas, along with container ships moving manufactured goods such as clothing, electronics and heavy machinery from Asia to Europe and the other way around. Around 19,000 vessels crossed the Suez in 2020, according to the Suez Canal Authority. Some 39 ships transit the Suez Canal daily on average, according to maritime industry trade group Bimco.

Car and computer makers are straining from a global chip shortage, exacerbated by a fire in a big chip-making factory in Japan last week. Car makers have closed plants after a Texas cold snap earlier last month hit plastics production, and California ports have been hit by backlogs and delays.

International crude prices traded up more than 3%, a move some analysts attributed to worry about oil shipments, while logistics executives said the blockage would likely result in delays and extra costs.

Shipping operators occasionally divert ships from the canal to the Cape of Good Hope around Africa to avoid bottlenecks, but sailings can take two weeks longer and cost cargo owners more in freight costs. Shippers said early Thursday they were already taking alternative routes to get supplies of oil, gas and other goods. Shipping costs have risen.

The cost of renting some tankers for voyages from the Middle East to Asia has jumped 26%, as shippers seek replacements from deliveries that used to transit from Europe to Suez, said Anoop Singh, a Singapore-based tanker analyst for shipping broker Braemar ACM.

The Ever Given, operated by Taiwan-based Evergreen Group and owned by Japan's Shoei Kisen, had been sailing to Rotterdam in the Netherlands from China, according to shipping data.

It was sailing northbound as part of a convoy when it got stuck in the canal at around 7 a.m. local time Tuesday, according to Gulf Agency Co., a service provider in the canal.

An Evergreen spokesperson said the ship was probably hit by strong winds causing it "to deviate from the channel and run aground."

Parts of the 120-mile long Suez Canal are a single lane stretch waterway measuring just 300-feet wide, which can require ships to travel through them in one direction at a time. Ships transit in northbound and southbound convoys. Any ship getting stuck can stop others from completing the transit.

Write to Costas Paris at costas.paris@wsj.com

(END) Dow Jones Newswires

March 25, 2021 06:52 ET (10:52 GMT)

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