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Partial Refloating of M/V EVER GIVEN Eases Suez Canal Blockage
One of the largest container ships in the world has been partially refloated after it ran aground in the Suez canal, causing a traffic jam of vessels at both ends of this vital international trade artery.
The 400 meter long M/V EVER GIVEN, operated by Evergreen, became stuck near the southern end of the canal on Tuesday. About 12% of global trade passes through the Suez Canal, of which roughly 5% of the world’s oil is carried through daily. With this connector between the Mediterranean and Red Sea blocked, the alternative is to route via the Cape of Good Hope or wait until the situation is resolved. In this article we will focus on about 30 of these vessels that are laden and ballast tankers of more than 25kt deadweight. The map below visualizes them, heading towards Suez from both the West and the East.
We expect that most vessels in ballast will decide to wait until the situation clarifies and if fixed on a charter party, will likely get canceled by charterers through protection clauses related to missing agreed upon laycan dates. This will no doubt affect vessel supply on both sides of the canal, as well as market rates. Black Sea-Med aframax seems to be leading the charge as seen below with ws170 on subs late on Friday the 26th.
Within the next days to weeks, more vessels are expected to have to decide if they will cross through the Suez canal or will have to go through the Cape of good hope.
For reference, a vessel, at the moment, crossing the Indian Ocean, would take 14 days to reach Malta if it goes through Suez versus 33 days if it goes around the Cape of Good Hope. Something to also consider is that for an aframax for example the cost to pass through the Suez Canal is roughly $300,000 in laden condition.
The table below looks at the previous month’s canal crossings as an indicator of which vessel sizes might be more likely to be affected by delays or the need to take alternative routing.
Based on the above table the segments that could potentially see the highest impact are the Suezmaxes and the Aframaxes/ LR2s since those segments involve trading through Suez in both directions. Especially the LR2 market, being specifically thin, with a very small number of vessels both East and West can potentially see significant changes on Freight rates. The graph below shows the commercially available vessel supply in the Arabian Gulf (Jubail) within the next 15 days, the typical fixing window and it is obvious that vessel supply is already at the lowest we have experienced in the last 3 months. Freight rates have already reacted earlier this week as shown below.
A major shipping lane is clearly closed but this will most probably have a short term effect for a few charterers and owners that are trying to carry cargo through the canal at present. Most large crude tankers (VLCC) have been historically taking the route around the Cape when doing long East to West or West to East voyages. Mid sized tankers (Suez, Afra) are more likely to be affected, maybe more so on the carriage of refined products. Low levels of crude oil demand due to the 3rd wave of coronavirus across Europe and the USA are keeping oil prices in check, yet we still see a 4% rise in prices on a Friday.
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Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.