The Suez Canal blockage and its economic consequences

Vrasidas Neofytou
Head of Investment Research

See all articles

The global shipping industry has been disrupted after a giant containership blocked Egypt’s Suez Canal on March 24, halting traffic on the shortest shipping route between Europe and Asia.

The Suez Canal is an artificial sea-level waterway connecting the Mediterranean Sea to the Red Sea which handles 12% of global seaborne trade.

The blockage has disrupted the transit of more than 400 vessels, including oil tankers, liquefied natural gas vessels, bulk carriers, and container ships.

Crude oil prices gained more than 5%, while the shipping freights for crude oil tankers nearly doubled as dozens of tankers are still waiting to pass through the Suez Canal.

Each day of blockage disrupts $10 billion worth of goods, adding concerns over the global supply chain which had already been impacted by the coronavirus pandemic. Ikea announced its supply chain could be disrupted while Amazon and Alibaba are also facing disruptions.

Even though the ship refloated on Monday, it will take many weeks for the whole supply chain to get back to normal, impacting manufacturers in Europe and retailers across the world.

The temporary closure of the Suez Canal highlights how the world is connected to the global supply chain, and the importance of strategic maritime waterways such as the Straits of Hormuz, and the Panama Canal.

Important Information: This communication is marketing material. The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Exclusive Capital communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

Read our detailed Marketing Communication Disclaimer

SHARE

CONNECT WITH OUR TEAM

Explore the ways in which we can help you achieve your investment goals.

OUR PARTNERS
bdo

EXTERNAL AUDITOR

ey

LEGAL ADVISOR

lgt

CUSTODIAN BANK

efg

APPROVED PARTNER

Raiffeisen

DEPOSITORY BANK

Prime Fund

GROUP MEMBER