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Suez Canal: Biden offers help as some vessels head for Cape of Good Hope

Joe Biden has said the US is looking at what it can do to help free the 400-metre container ship Ever Given from its position blocking the Suez canal as the trade route crisis stretched into a fifth day.

“We have equipment and capacity that most countries don’t have. And we are seeing what help we can be,” the US president said on Friday in Delaware. His comments came after a US official said the navy was prepared to send a team of dredging experts to the canal, but was awaiting approval from local authorities.

Meanwhile, as the latest effort to dislodge the ship with tug boats was suspended late on Friday, shipping companies began to reroute cargoes elsewhere to avoid worsening the huge logjam that has built up at either end of the crucial trade artery.

Maersk said 22 of its vessels had been affected so far and that it had so far rerouted two of its vessels around the Cape of Good Hope at the southern tip of Africa.

A spokesperson said: “We are closely monitoring the development of the floating operations of the affected vessel to better assess the measures to be taken to mitigate the delay of the affected cargo. The longer it takes to re-float the vessel, the greater the risk that we’ll see serious bottlenecks in ports in northern Europe, and the bigger the hurdle to clean up.”

The Japanese owner of the ship, Shoei Kisen Kaisha, said it aimed to free the vessel by Saturday afternoon UK time, but could not guarantee the effort would be complete by then.

Shipping rates for oil product tankers have nearly doubled since the ship became stranded, and efforts to free the giant vessel may take weeks and be complicated by unstable weather, threatening costly delays for companies already dealing with COVID-19 restrictions.

A Dutch rescue team had confirmed two additional tugs would arrive on Sunday to help dislodge the ship, the Ever Given’s technical manager, Bernhard Schulte Shipmanagement (BSM), said.

Earlier, the Suez Canal Authority (SCA) said efforts to free the ship by tug resumed following the completion of dredging operations at its bow to remove 20,000 cubic metres of sand.

“The tugging operations require the availability of a number of supporting factors including wind direction and tides, which makes it a complex technical process,” the authority said.

The SCA welcomed a US offer to help. Turkey also said it could send a vessel to the canal, amid a push by Ankara to repair ties with Egypt after years of animosity.

The suspension of traffic along the channel linking Europe and Asia has deepened problems for shipping lines.

The blockage could cost global trade $6bn-$10bn a week, a study by German insurer Allianz showed on Friday.

Ratings agency Moody’s expects Europe’s manufacturing and car parts suppliers to be most affected because they operate “just-in-time” supply chains, and said port congestion and further delays to the supply chain were “inevitable”.

Retired British Royal Navy commander Tom Sharpe said the best bet for the next attempt would be a high tide on Sunday, but because the ship was aground both front and rear there was a risk the hull could rupture if rescuers pulled too hard.

Mohab Mamish, the Egyptian presidential adviser on Suez canal projects and sea ports, told MBC Misr TV a floating crane should be used to transfer some of the Ever Given’s containers to another ship to lighten the vessel and enable it to float.

Oil prices rose over 3% on Friday as more than 30 oil tankers have remained idle on either side of the canal since Tuesday, shipping data on Refinitiv showed. However, there is low seasonal demand for crude and liquefied natural gas, which will likely mitigate the impact on prices, analysts said.

About 4m barrels of mostly Kazakh CPC Blend and some Russian Urals were waiting along with tankers carrying Libyan, Azeri and some North Sea crude oil for Asian refiners, traders said.

Egypt’s SUMED pipeline operator approached crude traders to see whether they wanted to book space in the system but so far traders prefer to wait to avoid high additional costs.

Analysts expect a greater price impact on smaller tankers carrying oil products, such as naphtha and fuel oil, for export from Europe to Asia, if the canal remains shut for weeks.

Rerouting ships around the Cape of Good Hope could add about two weeks and extra fuel costs to the voyage, said Sri Paravaikkarasu, director for Asia oil at FGE.

The blockage is weighing on the already weak Asian gasoil, or diesel, market. More than 60% of Asian exports to the west flowed via the choked Canal in 2020, according to FGE.

Aframax and Suezmax rates in the Mediterranean have also reacted as the market starts to price in fewer vessels being available in the region, shipbroker Braemar ACM Shipbroking said.

At least four Long-Range 2 tankers that might have been headed toward Suez from the Atlantic basin are now likely to be evaluating a passage around the Cape of Good Hope, Braemar ACM said. Each LR-2 tanker can carry around 75,000 tonnes of oil.

The cost of shipping clean products, such as gasoline and diesel, from the Russian port of Tuapse on the Black Sea to southern France jumped 73% in three days to $2.58 a barrel on 25 March, according to Refinitiv Eikon data.

On the crude side, traders have had to pay 10-20% more for replacement tankers but market freight rates have not yet risen as charterers are not ready to commit to higher levels in case the container is freed this weekend, shipbrokers said.

Source: The Guardian with Reuters

Header: Ever Given, a huge container ship found itself stuck in the Suez Canal. The incident occurred due to the lack of visibility during a sandstorm that hit Egypt. Now traffic along the waterway has come to a grinding halt impacting at least 150 ships. On March 25, a TASS source within the Canal’s authority said that it would take about three days to restore traffic. © CNES/AIRBUS DS via REUTERS