Suez Canal now unblocked, but Korean shipping companies not all smiles

HMM container ship / Courtesy of Hyundai Merchant Marine

By Kim Hyun-bin

The Ever Given container ship has been dislodged, after blocking the Suez Canal for almost a week. But Korean shipping companies say that it will take some time for the canal to resume normal operations, as hundreds of global container ships are on standby for passage.

Global container shipping companies have been rerouting their ships towards the Cape of Good Hope since last week. South Korea's largest shipping company, Hyundai Merchant Marine (HMM), decided to reroute four vessels while one ship is on standby near the Suez Canal.

Although the situation was resolved earlier than expected, there are hundreds of ships waiting near the canal, and experts believe it will take days to normalize operations there.

"There are more than 450 ships on standby as of late Monday, and usually the Egyptian government allows passage to 50 ships per day. Although more ships could pass, it would take a while, so we decided to reroute four ships last Friday," an HMM official said. "Normally, we have two ships that pass through the canal weekly. This week's ship has been rerouted, while next week's shipment is undecided at the moment."

There have been worries that the blockage could disrupt global supply chains, creating threats of costly delays for companies. Korean shipping companies say that it usually takes 3 months to deliver to Europe, and that the extra week needed for the rerouted shipments will not be a huge problem, even though it takes an extra 9,000 kilometers to reroute, along with an extensive fuel burden.

"It takes an extra week for a shipment to reach Europe if it is rerouted via the Cape of Good Hope, and the fuel cost is an extra burden," HMM official said. "However, even small ships pay a toll fee to use the canal that is worth hundreds of thousands of dollars, while big containerships pay much more. Considering the toll costs, we will pay a little bit more for fuel to reroute the vessels, and it will take a week longer, but it can't be seen as a major loss."

Around 19,000 ships pass through the canal each year, representing roughly 12 percent of global trade. The canal is responsible for roughly a third of global container trade and is a key source of foreign currency revenue for Egypt. The blockage has seen the country down around $15 million per day.

The 400-meter long ship, the Ever Given, became jammed diagonally across a southern section of the canal last Tuesday, halting shipping traffic on the shortest shipping route between Europe and Asia.

The accident has tarnished Japan's shipbuilding reputation, and some industry watchers believe the incident will become an opportunity for Korean shipbuilding companies to procure future deals.

Local shipbuilders already clinched a series of deals amid post-pandemic recovery hopes.
Samsung Heavy Industries inked a deal worth 2.8 trillion won from a Panamanian company to construct 20 container ships.

Earlier this month, Daewoo also procured a deal worth 256 billion won to build three liquefied petroleum gas carriers for a European company.

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