Ever Given and the loss of billions of dollars worldwide
The Suez Canal, located in Egypt, was, a week ago, blocked by a huge freighter (Ever Given), and ended up preventing the passage of numerous other ships. The waterway was built in 1869 and allows for navigation between Europe and Asia, without the need to travel around the African continent, saving time. We know that currently, time is money, more specifically dollars, the world's backbone.
The stranding of Ever Given in the channel caused a significant drop in the price of crude oil, as its distribution was affected by the blockade. In addition, there was also a delay in fuel and supplies from these vessels. It is estimated, according to O Globo, that US$ 400 million were lost per hour, approximately US$ 9.6 billion per day. The channel accounts for approximately 12% of world maritime trade.
Bloomberg estimates that approximately 400 ships were bottled, 14 of which had live cargo. Egypt, in particular, loses around U$ 13 million a day with the closure of the road, an important part of the country's economy. This location is called the "choke point" of the planet, that is, it is a point that can end up limiting the capacity of a system. This means that the performance of a commercial system is determined by the performance of these bottlenecks. It is extremely important for the supply of raw materials and goods.
Dealing more specifically with Brazil, around 9% of Brazilian maritime cargo passes through the channel, and the greatest concern is with refrigerated cargo, such as meat and fruit, as they rot after a certain time. Meat exports to the Middle East will be harmed. In addition, Brazil had a high demand from China, and as many Chinese ships were full and the channel was blocked, there is a risk of an increase in freight prices and greater difficulty in replenishing stocks in Brazil. Due to the pandemic, these freights are already much higher than normal, and the biggest concern would be if the blocking took longer.
This event had an impact on the international market and it will take some time for things to stabilize again. The Suez Canal has been the target of conflicts in the past due to its strategic location and remains of extreme importance in the world to this day.
By Lígia Rabello on 03/31/2021
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