Mocoh analysis of current Suez Canal blockage

2021-03-26 14:59:01

“This is an extraordinary act of fate and frankly inconceivable, but as the reality of the disaster sinks in, the consequences are enormous.”
Michael Hacking, Mocoh CEO.

Fortunately Mocoh does not have any vessels transiting the Suez at this time. But the long-term impact of this event will take time to play out, and when it does the repercussions will be significant.

Below is Mocoh’s chartering team’s analysis of the current and short-term situation.

Current status

  • The pictures and our discussion with market participants suggest that the bow of the Ever Given is wedged deep inside the canal walls. Its aft end sits close to the other end on sand. She has been described as looking like a ‘beached whale’.
  • Despite a tidal rise of about 1m last night, eight tugs were unable to dislodge the vessel.

Newswires suggest salvors will reach the vessel this morning Egypt time and attempts to free the vessel will resume.

Situation outlook

  • The situation now looks unlikely to be heading for a swift resolution given that it is not a simple grounding.
  • The canal mostly has a soft bottom, which means ships that have grounded in the past have generally refloated with assistance of the existing tugs and high tides. This has not been the case with the Ever Given. 
  • Do not rule out several days of blockage in the canal as, among other things, the vessel will very likely have to be lightened and dug out at the ends.
  • The number of vessels waiting to transit has increased by 12 units since yesterday. This breaks down into a rise from 25 to 32 at the Med Anchorages and 30 to 36 at the Red Sea Anchorages.
  • In terms of tankers, the increase is of 3 units from 23 to 26. This breaks down into a rise from 7 to 8 at the Med Anchorages and from 16 to 18 at the Red Sea end

Freight impact 

LR2 freight rates have been positively impacted. Aframax and Suezmax rates in the Med have also reacted first as the market starts to price in fewer vessels being available in the region.

Expect - vessel diversions. Anchorages are filling up quickly

Significant diversions are likely for the LR2s that might have been headed towards the Suez from the Atlantic basin but are now likely to be evaluating a passage around the Cape of Good Hope. Four vessels are doing this as of now.