Implications of Suez Canal Blockage

Arnav Bansal
3 min readMar 26, 2021

A traffic jam leads to missing your morning meeting. Well, this sounds familiar. But a blockage on a 200km canal which is wider than the Ketty Freeway (the widest expressway in the world) haunting to create massive economic ripples around the globe surely raises a few eyebrows.

Suez Canal completed in 1869 connects Meditererian sea with red sea. It is the shortest route for any ship to sail between Asia and Europe. The man-made marvel caters to more than 18,000 ships carrying more than a billion tonnes every year. On average 51 ships pass through the canal every day. But since 23 March 2021, this is not the case.

A Taiwanese transport company Evergreen Marine owned, a gigantic 400m long and 59M wide ship called ‘Ever Given’, lost its control and wedged sideways across the canal due to heavy winds. The voyage that began from China to the Netherlands experienced an unforeseen halt in Egypt. The ship hosts 25 crew members who all are said to be Indians.

The 205m wide canal which facilitates passage to 12% of the global trade has no way for the other vessels to pass through. This might sound similar to a heavy truck overturning and hence leading to a traffic jam. But as familiar it may sound, dire can be the repercussions. Egypt earns more than $13 Million a day from the canal. But with the blockage and no ships passing, Egypt is set loose this source of revenue for upcoming days or maybe weeks.

We live in a small interdependent world where even the demand for a needle is met through international trade. The blockage of the Suez Canal means billions of dollars worth of goods and oil will have to take the Cape of Good Hope route around Africa which is thousands of miles longer. This means the transport cost and the time taken for the shipments are set to increase many folds.

Around 5% of the crude oil exported globally uses the Suez Canal route. In absolute terms, 5% of the oil supply is set to be delayed across the parts of Asia. India, importing about 500,000 barrels of oil per day is the biggest importer of crude oil from this route. The already high oil prices can witness more records due to prolonged blockage. An increase in prices definitely on cards, but the availability of containers for future shipments might also get affected. Not just the oil, which holds the key in the 21st-century economy, but the merchandise and raw material supply will also be affected and hence resulting in higher prices if the blockage is not cleared within a few days.

In short, a ship stuck in a distant canal can dent our pockets. A blockage on a mere 200km route can cause havoc in the world economy. A few weeks on route jam can impact the supply chain. This not just highlights the importance of the Suez Canal route but also reminds us that, the interconnected world we live in, has its own limitations against the invincible geography.



Arnav Bansal

An engineer diving into the field of Marketing and Economics.