Goods being shipped in and out of Hong Kong were likely to be delayed by at least three weeks and could potentially cost more as a result of the blockage at the Suez Canal, industry figures warned on Friday.
The 200,000-tonne container ship Ever Given, which is operated by Taiwan’s Evergreen Marine, was stranded at the southern end of the canal on Tuesday, and Willy Lin Sun-mo, chairman of the Hong Kong Shippers’ Council, said that had taken a heavy toll on the global supply chain.
Trade experts also warned of the prospect of higher container shipment charges as a result, disrupting a global shipping system already strained by the coronavirus pandemic.
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“Expect delays in shipment by a minimum of three weeks,” Lin said.
The 400-metre Ever Given, which would dwarf the 320-metre Eiffel Tower if they were laid side by side, was carrying 20,000 containers when it ran aground.
It could take weeks to free the vessel, and Lloyd’s List shipping experts have estimated that up to US$400 million per hour in trade is being held up. On Friday, 200 ships were stuck at the northern and southern ends of the canal.
“What a black swan event,” said Louis Chan Wing-kin, the Hong Kong Trade Development Council’s assistant principal economist in global research. “Global container shipment charges are likely to go up, which may spill to air freight.”
Dr Paul Tsui Hong-yan, vice-president of the Chartered Institute of Logistics and Transport in Hong Kong, said ocean freight costs would jump 10-20 per cent in the short term after the pandemic had pushed them four- to fivefold higher in the past year.
“The longer it takes to restore traffic, the greater the increase in costs,” he said. “Existing ocean freight charges are already the highest during my 30-year career with the industry.”
The Suez Canal serves as the shortest and quickest link for trade between Asia and Europe. Lin estimated imports and exports ranging from raw materials and goods such as electronics to daily necessities like food, including fruits and other perishables, and hygiene products would be affected.
The Transport and Housing Bureau said a huge proportion of the container throughput between Hong and Europe was shipped via the canal, but if the blockage was resolved soon, significant damage was not expected. It cited the laden ocean container throughput between Hong Kong and Europe as being 691,000 twenty-foot equivalent units (TEUs) in 2020, accounting for 6.7 per cent of the city’s overall total.
One of Hong Kong’s largest container port operators, Modern Terminals Ltd (MTL), said it expected disruptions in cargo flow over the next few weeks.
“Over the next few weeks, we expect that ships will start experiencing delays causing disruption to cargo flow which will have an impact on cargo volume going through ports in the world including Hong Kong and Mainland China,” a spokeswoman said. “How long this disruption will last will depend on how quickly they can refloat the vessel and reopen the Suez Canal.”
MTL was confident lessons learned from the early stages of the Covid-19 outbreak last year, its efficient operations, and solid network connectivity could mitigate the risks of the potential disruption, she added.
“We will continue to monitor the situation closely and work with our shipping line customers to facilitate cargo flow to minimise the impact to global supply chains,” she said.
Lin said there was an alternative route around the Cape of Good Hope, on the southern tip of Africa, but it would take five to six extra days and came with the added risk of pirates.
A spokeswoman for the Hong Kong Shipowners Association said most shipping companies were taking a wait-and-see approach.
She said that diverting around Cape Horn, at the southern tip of South America, could add 3,800 miles (6,100km) to a journey and up to about 12 days extra sailing time. A large cargo ship cost about US$5,000 to US$8,000 per day if it just waited at sea, she added.