Legal Aspects of the Suez Crisis and the Overall Impact of The Suez Canal on World Trade:
Exploring Other Routes as a Back-Up
From Dilara Dayioglugil, SODAC
September 29, 2021
The ship “EVER GIVEN”, which was at the top of the agenda of the whole world due to its running aground in the Suez Canal past month, was floated after long hours of work and the Suez Canal was reopened to traffic after. Although this seems to be the end of the issue in terms of the media, it is the beginning of the legal side of the incident.
As it is known, not only the “EVER GIVEN” ship and the cargoes it carries, but also many ships and the loads carried on them were affected due to the incident. Damage was big and according to a study by Allianz, between 23-29 March, each single day the Suez remained blocked could decrease global annual trade growth by 0.2-0.4% and cost USD $6-10 billion and, or the equivalent of USD $400 million per hour.
H/T : USATODAY
Markets was interrupted by Ever Given, global supply chains were affected and remained blocked until the Ever Given gets back on track. Especially initially Middle Eastern and Asian companies as well as European companies began to look for new ways to overcome the resulting stoppage or delay in supplies. When the canal was cleared GCC markets observed a jump in shares. The Abu Dhabi Securities Exchange (ADX) gained 1.7%, while the Dubai Financial Market rose by 2.1% on the day following the “EVER GIVEN’s” re-floating.
Although it is believed that this incident is not going to have a huge impact on global trade for years, but it's another wake-up call for companies that have set up their business to rely on supply chains with little room for error, said William Lee, chief economist at the Milken Institute. On the other hand, the impact of legal sanctions on companies is still giving burden and it is believed that it will continue to have an impact for a long time: delays in the shipment of goods, potential damage to the goods or the ship itself, damage to the canal during dredging and finally blockage delayed hundreds of ships.
Ever since the Suez Canal incident it has revealed the Canal between fragility Europe and Asia in the current stands, this has led for shipping companies to explore alternative routes.
The use of the North Sea Corridor could be an alternative scheme. “International North-South Transport Corridor (INSTC)”. There is a plan to expand the sea route to a 7,200 km long route connecting Mumbai to Moscow.
Cape of Good Hope Corridor in South Africa
H/T : BRILL
Although on August 20, 2021, “EVER GIVEN” returned and successfully passed trough Suez Canal, shipping companies need to be still cautious and should be able to take immediate actions in case such an event reoccurs. Evidently, incidents like the Suez Canal are unavoidable, but companies can reduce damage by raising reflective awareness of the crisis.
©2021, SODACLAW, ALL RIGHTS RESERVED.
We receive, collect and store any information you enter on our website or provide us in any other way. We may use software tools to measure and collect session information, including page response times, length of visits to certain pages, page interaction information, and methods used to browse away from the page. We also collect personally identifiable information (including name, email and communications, Company name).
Toronto - Istanbul - Athens - Moscow