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Global Trade Gets Rerouted With Suez Canal Still Blocked
By Salma El Wardany, Ann Koh, Hanna Hoikkala, and Jinshan Hong26 March 2021, 16:07 GMT Updated on 26 March 2021, 20:59 GMT
· Goods from furniture to bulldozers are delayed or diverted
· Supply chains already strained by pandemic suffer another blow
An abrupt starboard turn in the Atlantic Ocean is the perfect illustration of the trade disruption caused by the blockage of one of the world’s most important waterways.
The Marlin Santorini, a tanker capable of carrying 1 million barrels of oil, switched destinations away from the Suez Canal, turned south and appears to be heading around Africa.
The diversion could add about 6,000 miles to the ship’s journey and something like $300,000 in fuel costs, but it’s just one of hundreds of individual setbacks suffered this week by vessels that carry everything from raw materials to finished goods around the world.
Swedish furniture giant Ikea and yellow bulldozer-maker Caterpillar Inc. are among the many international companies facing supply-chain headaches. The crisis is buoying natural gas prices in Europe, delaying wind farms in Asia and could soon hit your instant coffee.
With the container ship Ever Given likely to remain stuck in the Suez Canal until next week, it’s only the start of the rearranging of global trade.
----The crisis comes as companies are already battling the strain of adapting supply chains to cope with a pandemic-related e-commerce boom. Covid-19 regulations at ports are slowing the passage of some products. While consumers and companies have weathered these problems, the Suez incident promises fresh headwinds and higher costs in the weeks ahead, particularly in Europe.
----At least seven liquefied natural gas vessels have had routes adjusted away from the canal, according to Kpler analyst Rebecca Chia, and major shippers including A.P. Moller-Maersk A/S and Hapag-Lloyd AG are also studying detours. Shipping costs are also surging -- the price of sending a 40-foot container from China to Europe has almost quadrupled from a year ago.
The prospect of a long blockage has already boosted European natural gas prices, as cargoes laden with the liquefied form of the fuel destined for the region face delays. About 2 million barrels a day of oil flows are being held up, according to Braemar ACM Shipbroking.
Bulk carriers that ship products from coffee to iron ore have also been snarled up, potentially limiting the availability of some foodstuffs.
“The global food system is already under pressure from Covid,” Tim Benton, research director in emerging risks at Chatham House in London and a food security expert, said in an interview. The trade disruption “adds a further straw to the camel’s back.”
A list of cargo aboard a HMM Co. vessel waiting outside the canal to return to Asia gives an indication of the sweep of industries caught up in the disruption, with goods on board including wood, machinery, frozen beef, paper, powdered milk, furniture, beer, frozen pork, auto components, chocolate, and cosmetics.
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New Suez crisis adds to pandemic supply worries for European, U.S. retailers
March 26, 2021 9:37 PM By Lisa Baertlein, Jonathan Saul, Anna Ringstrom
LOS ANGELES/London (Reuters) - A stranded container ship blocking the Suez Canal threatens to make it even more difficult for European and U.S. retailers to keep products in stock during the coronavirus pandemic.
The Suez Canal saga that began on Tuesday and could go on for weeks, is just the latest crisis to strike the global supply chain that was upended when coronavirus shutdowns spurred house-bound consumers to upgrade appliances, sofas, televisions and backyards.
IKEA, the world’s largest furniture seller, and London-based electronics seller Dixons Carphone are among the retailers with goods on the stranded vessel, both companies told Reuters.
Amsterdam-based household goods seller Blokker confirmed they have goods that are being delayed, but would not say what.
The salvage company overseeing the rescue effort has warned it could take weeks to dislodge the massive Ever Given, which got wedged in the canal during a sand storm.
The resulting surge in imports due to the pandemic to Europe and the United States stranded empty containers in the wrong places, drove up cargo rates and caused seaport bottlenecks that are rippling throughout the transportation sector - and threatening to get worse.
“Ships, containers and goods are all in the wrong places,” said Douglas Kent, an executive vice at the Association for Supply Chain Management (ASCM).
---- “Depending on how this work proceeds and how long it takes to finish the operation, it may create constraints on our supply chain,” said Hannes Mård, spokesman for IKEA brand owner and franchiser Inter IKEA.
“This is a devastating event in an already stressed market, where high demand has caused congestion delays that keep import cargo from reaching store shelves in a timely fashion,” said Richard Roche, a sub-committee chairman at the National Customs Brokers & Forwarders Association of America.
The risk to container shipping is greatest in Europe - where key seaports like Antwerp in Belgium and Felixstowe in Britain are grappling with backlogs. The United States is exposed on the East and Gulf Coasts. About 45% cargo volume at the Port of New York & New Jersey moves through the Suez Canal, experts said.
Walmart , which uses seaports in the Southeast and other parts of the country, and its online rival Amazon.com did not immediately respond to comment.
U.S. companies like Nike and Peloton recently made headlines calling out millions of dollars in shipping delay-related costs and product availability disruption. Relief checks from President Joe Biden’s $1.9 trillion coronavirus stimulus package are expected to boost consumer demand and intensify such pressures.
Within days, the race to reroute cargo could be on - pitting retailers against other industries for precious cargo space.
British supply chain procurement partner OCI Limited Group Chief Executive Oliver Chapman said 134 containers of personal protective gear including gloves and masks eventually bound for organizations like England’s National Health Service and New York’s Northwell Health are on nine ships stuck behind the Ever Given.
He said alternative rail service from Asia into Europe is already heavily congested, and flying cargo is prohibitively expensive – increasing the cost of one small box of nitrile gloves from about 25 cents for sea to $2-$3 for air into Europe.
His group is already rerouting some U.S. cargo to the Port of Los Angeles, which is digging out from under a mountain of cargo.
Refloat Efforts Suspended; U.S. Seeks to Help: Suez Update
By Salma El Wardany, Mirette Magdy , and Jack Wittels25 March 2021, 18:10 GMT Updated on 26 March 2021, 23:25 GMT
The blockage of the Suez Canal is wreaking havoc on global seaborne trade, raising the prospects of higher inflation with more ships ferrying cargoes and commodities forced to divert.
A special dredger has been deployed to free the vessel that has been stuck in the key waterway for days. Natural gas prices have increased and food supply chains may be affected if the blockage persists. Mark Ma, owner of China-based Seabay International Freight Forwarding Ltd., which has 20 to 30 containers waiting to cross the blocked canal, said that if traffic doesn’t resume in a week, “it will be horrible.”
Two additional tugs will arrive at the Suez Canal by Sunday to assist in the refloating of the ship, Bernhard Schulte Shipmanagement, technical manager for the vessel, said in a statement on Friday.
Efforts to Dislodge Suez Canal Ship Said to Need at Least a Week
The pile-up of ships is creating another setback for global supply chains already strained by the e-commerce boom linked to the pandemic. About 12% of global trade transits the canal that’s so strategic world powers have fought over it. On Friday, the Biden administration raised concerns about the impact on global energy markets.
Key Highlights:
- Two more tugs will arrive at the Ever Given by Sunday, ship management company says in statement
- Oil tanker diverts; several ships in Indian Ocean that were bound for Suez change course
- Food supply chain faces risks
- The containership could be carrying almost $1 billion of cargo, IHS says
- Work to dislodge the ship will take until at least middle of next week
- Almost 300 vessels have queued up, compared with 238 on Thursday, according to Bloomberg data
- Why the Suez Canal is so important: QuickTake
Refloat Efforts Suspended (11:25 p.m. London)
The salvage team suspended the re-floating operation at midnight local time, according to Inchcape Shipping Services, a maritime services provider.
The dredger will continue working and the next re-floating attempt will be made at 2 p.m. local time Saturday with the high tide.
Ship’s Rear Isn’t ‘Fully Stuck’ (10:52 London)
“We have done a full inspection, and the positive news is that the rear end of the ship isn’t fully stuck in the clay,” said Peter Berdowski, chief executive officer of Boskalis Westminster, the parent company of the elite salvage team.
He spoke in an interview on the Nieuwsuur TV program in the Netherlands.
“With the two big tugboats that are underway, combined with the dredging, we hope that will be sufficient to get the ship afloat somewhere next week,” he said.
Tides are expected to swell Monday night and Tuesday night and into the early hours of Wednesday.
If the ship isn’t refloated then, the salvage team will move to “plan B,” which will involve lifting containers off the vessel, he said.
“We will start taking containers from the ship anyway this weekend.”
Biden Says U.S. Looking to Help (10:22 p.m. London)
The U.S. is looking into how it can help to unblock the canal, President Joe Biden said.
“We have equipment and capacity that most countries don’t have. And we’re seeing what help we can be,” Biden said.
Sea-Doo Maker Pivots to Planes (9 p.m. London)
Sea-Doo maker BRP Inc. has parts from Asian suppliers stuck on vessels jammed in the blockage.
The situation prompted the Canadian maker of recreational vehicles to shift to its backup plan: flying another batch of components from Asia to its North American plants.
“It’s more expensive, but it’s better than stopping assembly lines,” BRP Chief Executive Officer Jose Boisjoli said Friday in a phone interview.
Ever Given Was Refloated From Stern (8:42 p.m. London)
The elite salvage team working with the Suez Canal Authority was able to float the vessel from its “stern/aft” and released the rudder at approximately 9 p.m. local time, according to Inchcape Shipping Services, a maritime services provider.
Another effort will take place using the high tide, with the hope of refloating the vessel entirely.
Canal Authority Says Tug Operations Restart (7:54 p.m. London)
Pulling operations with tug boats to free the ship restarted after dredging operations were completed, the Suez Canal Authority said on its Facebook page.
‘Perfect Storm’ Brewing for Italy’s Ports (7:07 p.m. London)
Once the Suez blockage ends, the huge backlog of ships will create a traffic jam for ports on the Mediterranean.
“When traffic will flow again, ships will flood Italian ports,” said Daniele Rossi, chief of Italian ports association (Assoporti). Operational difficulties will make that difficult to “cope” with, he said.
“The perfect storm is coming.”
About 40% of Italian imports and exports pass through the Suez Canal, according to Assoporti/SRM research on Italian maritime economy.
Logjam Nears 300 Ships (6:16 p.m. London)
About 293 ships ranging from livestock carriers to liquefied natural gas tankers are waiting to transit the clogged waterway, compared with 238 on Thursday, shipping data compiled by Bloomberg show.
White House Sees Energy Impacts (5:17 p.m. London)
The White House is concerned about the impact on global energy, said Press Secretary Jen Psaki, who added that the Biden administration is monitoring market conditions.
“We do see some potential impacts on energy markets,” she told reporters at a briefing on Friday.
Earlier, a spokesman for the White House National Security Council said the U.S. government had offered Egypt assistance removing the grounded ship, the Ever Given.
Wind Turbine Projects Seen Delayed (4 p.m. London)
Germany’s Enercon expects delays in wind turbine components from Europe to projects in Asia, according to a company spokesperson. The wind turbine maker also sees risks of congestion at ports, once the ships held up at the Suez Canal arrive at their destinations. Enercon is examining to what extent the problem will affect its supply chains.
North Sea Crude Loading Delays Likely (3:28 p.m. London)
At least seven supertankers are expected to load North Sea crude in April, with two or three of them likely to face delays due to the blockage in the Suez Canal, according to tanker fixture reports and ship tracking data compiled by Bloomberg.
Tanker Shares Surge (3:10 p.m. London)
With diversions starting to pop up, the shares of oil tanker companies surged. Frontline Ltd. rose as much as 11% in Oslo, the biggest intraday gain since September. Other owners were jumping too: Euronav NV climbed as much as 7%, while DHT Holdings Inc. was also up 7%, and International Seaways Inc. added as much as 6.4%. It comes as the prospect of ships taking the longer route around the southern tip of Africa raises the chances for higher earnings for ships.
Multiple Ships in Indian Ocean Take Detour (1:58 p.m. London)
Several ships in the Indian Ocean, initially bound for the Suez Canal, have changed course away from the waterway after it became blocked, according to vessel-tracking data compiled by Bloomberg. The vessels include container ships Ever Greet, HMM Stockholm and OOCL United Kingdom; vehicle carrier Morning Calm; and cargo ship Angelic.
U.S.-Asia Naphtha Arbitrage Opens on Suez Canal Blockage: BNEF (9:55 a.m. New York)
The U.S. Gulf Coast-to-East Asia naphtha arbitrage has opened as naphtha shipments from key exporters such as Russia and Algeria delayed by the blockage in the Suez Canal.
Oil Tanker for North Sea Loading Delayed a Week (12:59 p.m. London)
Supertanker Olympic Lady is expected to reach the North Sea for planned loading around April 26-30, roughly a week’s delay, amid the blockage at the Suez Canal, according to person familiar with the matter. The Very large Crude Carrier was originally set to have used the canal to reach the North Sea for loading around April 20-25.
Economists Predict Inflation Pressure (12:19 p.m. London)
The blockage adds to supply-chain disruptions that have already cost world trade more than $200 billion since the start of the year, according to Allianz SE calculations. Every week the Suez Canal remains closed adds as much as $10 billion to the bill.
Economists predict higher prices as a result.
“I’m relatively sanguine about the additional hit to trade,” said Joanna Konings, senior economist at ING. But “with everyone’s tolerance for absorbing higher shipping costs run down, we might see some pass through from this episode. It’s an inflationary shock that could come right to the consumer.”
Food Supply Chain Faces Risk (11:44 a.m. London)
The Suez blockage may mean limited availability of food, supply delays and higher prices at a time when economies and households are already grappling with rising food inflation and disruptions from Covid-19.
Wealthy but food-deficit Gulf states and food aid-dependent Horn of Africa nations are particularly vulnerable to disturbances to grain flows. The canal handles at least 15% of global rice and wheat exports, according to research from Chatham House.
“If it’s a delay of a month or longer it will put on a significant price pressure and reduce availability in some places,” Tim Benton, research director in emerging risks at Chatham House in London and a food security expert, said in an interview. “There are lots of compounding issues. The global food system is already under pressure from Covid. And clearly anything that adds a further straw to the camel’s back makes things bad.”
Japan’s Oil Supply Won’t be Affected (11:40 a.m. London)
The Suez canal blockage won’t immediately impact Japan’s crude supplies, Finance Minister Taro Aso told reporters in Tokyo.
“Unlike in the past, Japan currently has enough of an oil stockpile for around 200 days, so I don’t think this issue will immediately impact Japan’s oil supplies,” Aso said.
Russian Wheat Flows Largely Unaffected (11:35 a.m. London)
The blockage isn’t causing major problems for Russian grain exports because sales of wheat from the world’s top shipper are currently low, said Eduard Zernin, chairman of the Russian Union of Grain Exporters. There’s no sign yet of any significant Russian sales being caught up in the queue, he said.
Elsewhere in the Black Sea region, Ukraine’s deputy economy minister and the head of the country’s grain group, which includes the top shippers, said they don’t see any threats to the nation’s exports if the situation is resolved soon.
Europe Natural Gas Prices Rise (11:15 a.m. London)
The prospect of the container vessel blocking the Suez Canal for up to a week boosted European natural gas prices as cargoes laden with fuel destined for the region face severe delays. The blockage may create a supply gap that could be filled by pipeline gas from Russia or U.S. LNG. Benchmark Dutch and U.K. gas for next month both jumped on Friday.
Three tankers near the canal’s entry will struggle to deliver LNG from Qatar for scheduled arrivals in early April. Vessels that are already waiting are unlikely to turn around at this stage, said Fauziah Marzuki, an analyst at BloombergNEF.
“First, it is an outlier,
as it lies outside the realm of regular expectations, because nothing in the
past can convincingly point to its possibility. Second, it carries an extreme
impact (unlike the bird). Third, in spite of its outlier status, human nature
makes us concoct explanations for its occurrence after the fact, making it
explainable and predictable.”
The Black Swan: The Impact of the Highly Improbable
Covid-19 Corner
This section will continue until it becomes unneeded.
Top German health official says third coronavirus wave could be worst so far
March 26, 2021 9:47 AM By Reuters Staff
BERLIN (Reuters) - There are clear signals that the current wave of coronavirus infections in Germany could be worse than the first two, the chief of Germany’s RKI health insitute said on Friday.
If people use the Easter days to reduce contacts, then this third wave could at least be tempered, Lothar Wieler, head of the Robert Koch Institute (RKI) for Infectious Diseases, told a news conference on Friday.
Poland reports new daily record of 35,143 coronavirus cases
March 26, 2021 9:49 AM
WARSAW (Reuters) - Poland reported a record number of coronavirus infections for the third consecutive day on Friday, with 35,143 new cases, health ministry data showed as the country’s healthcare system is testing the limits of its capacity.
The government has announced more restrictions on Thursday to curb the surging number of infections.
Britain approves 20-second COVID-19 test, distributor says
March 26, 2021 9:07 AM
LONDON (Reuters) - Britain’s medicine regulator has approved a 20-second COVID-19 test, the product’s distributor said on Friday as it launched a testing system it said could be used in airports, sports venues and businesses.
Rapid tests are seen as a key plank of Prime Minister Boris Johnson’s roadmap out of lockdown, but concerns have been expressed about the accuracy of existing lateral flow devices.
The Virolens test, which is made by British start-up iAbra and TT Electronics, has been trialled at Heathrow Airport, and uses swabs of saliva.
Histate, which is distributing the test, said it would launch with immediate effect following the approval in the UK by the Medicines and Healthcare products Regulatory Agency (MHRA), and was hoping for a further rollout in coming months.
Histate said trials had indicated the test had 98.1% sensitivity, meaning it returns few false negatives, and 99.7% specificity, meaning few false positives.
Merck’s Little Brown Pill Could Transform the Fight Against Covid
The antiviral drug molnupiravir, still in clinical trials, would give doctors an important new treatment and a weapon against coronaviruses and future pandemics
25 March 2021, 09:00 GMT
---- Painter and Holman weren’t talking about targeting Covid at the time. The disease and the coronavirus that causes it, SARS-CoV-2, weren’t major concerns at the J.P. Morgan-run conference, where handshakes and cocktail parties with hundreds of guests were still the norm. Rather, Painter was hoping his drug, molnupiravir, could get more funding to speed up flu studies. Holman was eager to see if it worked on Ebola. That’s the thing about molnupiravir: Many scientists think it could be a broad-spectrum antiviral, effective against a range of threats.
A few days later, Holman arrived in Atlanta to see the labs at Emory and pore through the early data. As she and Painter hashed out the terms of a deal in which Ridgeback would buy the drug and start studying its safety and efficacy in people, Covid was seeping into the public consciousness. By the time Ridgeback announced its acquisition of molnupiravir, on March 19, the world had shut down, and it was clear which threat the drug needed to be tested on right away. Clinical trials for the pill kicked off in April. The next month, Merck & Co., which has a deep history of public-health development work, including on HIV and Ebola, struck a deal to buy molnupiravir from Ridgeback and start the types of large-scale
Even as vaccines are rolling out worldwide, the coronavirus and its mutations still pose a major health threat. Not everyone who’s eligible for a shot will agree to get one. The hundreds of thousands of people who continue to contract Covid each day have few treatment options. There’s no simple, inexpensive pill that can prevent those at the earliest stages of infection from later needing to be hospitalized. The monoclonal antibody therapies that doctors now have available for those most at risk of getting severely ill need to be administered by infusions at specialized medical centers. And for those who do become hospitalized, the antiviral remdesivir, from Gilead Sciences Inc., speeds recovery, but hasn’t been shown to reduce deaths.
Drugmakers see an opportunity to add to the arsenal of potential therapies. There are 246 antivirals in development, according to the Biotechnology Innovation Organization, an industry trade group. And companies as big as Pfizer Inc. and as little-known as Veru Inc. are testing them in pill form. Merck’s molnupiravir is among the furthest along. Its developers hope the pills can be prescribed widely to anyone who gets sick. Think Tamiflu for Covid.
The hurdle, beyond ensuring the drug works, is making sure it’s safe. Developers of antivirals have been dealing with the thorny issues they pose for decades. Should Merck succeed in demonstrating that molnupiravir is effective and free of serious side effects, it could be a boon to the company, and to society, for many years to come.
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Next, some very useful vaccine links kindly sent along from a LIR reader in Canada. The links come from a most informative update from Stanford Hospital in California.
World Health Organization - Landscape of COVID-19 candidate vaccines. https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines
NY Times Coronavirus Vaccine Tracker. https://www.nytimes.com/interactive/2020/science/coronavirus-vaccine-tracker.html
Stanford Website. https://racetoacure.stanford.edu/clinical-trials/132
FDA information. https://www.fda.gov/media/139638/download
Regulatory Focus COVID-19 vaccine tracker. https://www.raps.org/news-and-articles/news-articles/2020/3/covid-19-vaccine-tracker
Some more useful Covid links.
Johns Hopkins Coronavirus resource centre
https://coronavirus.jhu.edu/map.html
Rt Covid-19
The Spectator Covid-19 data tracker (UK)
https://data.spectator.co.uk/city/national
Technology Update.
With events happening fast in the development of solar power and graphene, I’ve added this section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards.
Today, what happened to the Texas power grid last month when the Texas power grid came within 4.5 minutes of a total failure. Approx. 16 minutes.
What Really Happened During the Texas Power Grid Outage?
https://www.youtube.com/watch?v=08mwXICY4JM
This weekend’s musical diversion. Haydn tries his hand with a trumpet concerto. Approx. 6 minutes.
Maurice Andre - Haydn trumpet concerto allegro
https://www.youtube.com/watch?v=RLDF8OeD-hc
This weekend’s oddity. Why do Brits drive on the left? Well for one thing, it’s safer, everyone else in Britain is driving on the left!
Why do the British drive on the left?
https://www.youtube.com/watch?v=prNWTqOoeBs
Finally, remembering the world’s worst air crash March 27, 1977. Approx. 14 minutes.
The Crash Of The Century | Tenerife Airport Disaster
https://www.youtube.com/watch?v=2mnuQkmywrc
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