Last week a 1,300-foot container ship became wedged in the Suez Canal in Egypt, causing massive disruption to the already squeezed global ocean shipping industry. More than 10% of world trade is said to pass through this canal, as it greatly shortens the route between continents. The blockage is estimated to have cost $10 billion per day that the canal remained unpassable.
The ship was finally dislodged on Monday, March 29th after it spent 6 days blocking the canal, however, the impact will be much longer lasting due to the 400 ships backed up due to the incident and others which opted to take longer routes to avoid the blockage, some around the entire African continent. This added shipping delay came at the worst time, as the global shipping industry has already been dealing with container shortages and bottlenecks that were repercussions of the global coronavirus pandemic.
This has a lot of manufacturers worried about how these added delays will affect their supply chain. Lead times have already been stretched out in the U.S. due to full vessels, equipment shortages, and port & rail congestion, so further delays could really put a halt on the recovering manufacturing sector. Domestic supply of chemical raw materials was severely impacted by winter weather in February and is only just now beginning to recover, and with imports only coming in at a trickle, many crucial chemical products have been in tight supply which is driving prices higher.