/ world today news/ The colossal consequences of one of the world’s largest container ships, Ever Given, running aground and blocking the Suez Canal in Egypt were felt internationally.
The huge cargo ship, wedged in the channel since last Tuesday during a seasonal sandstorm, was finally freed from the shoreline in the early hours of this morning by tugboats. Efforts to fully relocate it are ongoing at the time of writing.
The blocking of a vital artery of the world economy by a single ship – an accident just waiting to happen – reveals fundamental aspects of modern society.
The ship is owned by the Japanese company “Shoei Kisen Kaisha”, operated by the Taiwanese company “Evergreen Marine Corporation” and sails under the flag of Panama, carrying goods worth 89 million dollars.
Manufacturing and economic activity have become internationally integrated to an unprecedented degree, linking the working class in each country in a powerful interconnected network, so that the disruption of a single major transit center is quickly felt around the world.
In this photo released by the Suez Canal Authority, tugboats and dredges work to free the Japanese-owned Panamanian ship Ever Given, which is in the Suez Canal, Sunday, March 28, 2021. (Suez Canal Authority via Associated Press) .
Almost 50 percent of the vessels that pass through the Suez Canal are container ships carrying automotive components, appliances, clothing and consumer electronics to and from the continents.
The goods themselves, destined for Europe, are integrated into components that are then shipped to America and the rest of the world, often for final assembly elsewhere.
However, under the irrational, anarchic capitalist social order, where the world is divided into competing nation-states, there has been virtually no serious preparation for an event such as the Suez Canal debacle, which, moreover, has long been predicted given the massive expansion of the number and size of cargo “megaships.”
With more than 450 vessels now waiting at both ends of the canal, analysts believe the insurance industry could face claims in excess of $100 million.
The final bill, including compensation for delays, loss of revenue for the Suez Canal Authority, potential damage to the cargo and costs of re-routing the vessel, could include even higher sums.
Although the exact causes of the Ever Given disaster have yet to be determined, everything points to endemic incompetence and corruption in the Egyptian state apparatus.
The Suez Canal Authority (SCA), a state-owned and largely military corporation responsible for the operation and maintenance of the Suez Canal, including its computerized traffic management system, pilots and so on, tried to play down the severity of the incident and could not say how long it will take to unblock the road between the Mediterranean and the Red Sea.
The head of the Suceah Canal Authority, Lt. Gen. Osama Rabieh, has already announced that the agency is discussing compensation for the waiting ships, which suggests negligence on the part of the Egyptian institution.
But the global implications are far greater. Analysts warn that the blockade threatens to severely disrupt global trade supplies.
Accordingly, there will be huge implications for global supply chains, which now rely on minimum inventory levels commensurate with production techniques of the past, as well as implications for worker jobs and consumer prices.
This is likely to further intensify national antagonisms.
The Suez Canal is one of the busiest sea routes in the world, connecting the Indian Ocean, the Red Sea and the Mediterranean Sea. The canal is crossed by 19,000 vessels a year, carrying goods worth $10 billion each day, or about 13 percent of global trade by volume, and about 10 percent of the world’s oil, mostly between Asia, the Middle East and Europe.
As maritime trade has grown, so has the size of container ships, driven by the need to reduce shipping costs and achieve particularly large economies of scale.
The average size of container ships is now five times larger than just 20 years ago, paving the way for both fewer ships and huge cost reductions, to the extent that vessels capable of carrying 20,000 equivalent 20-foot containers, are operated with a crew of only 20 people.
But such ships are too deep-water and large to pass through some sea lanes, such as the Panama Canal, or dock at some port piers.
This requires significant investment to accommodate the ships, handle their loading and unloading, and manage the schedule to avoid port congestion.
With the Suez Canal blocked, some ships began to divert around the southern tip of Africa, a much more dangerous route, adding up to two weeks to the journey, with higher labor and fuel costs.
That in turn will exacerbate shortages of containers and cargo ships and create delays, commodity shortages and higher prices, with oil prices expected to rise 7 percent in response to news of the Suez blockade.
A report published by German insurance company Allianz Global estimated that a blockade of the canal could cost $6 billion to $10 billion a week in global trade.
Smaller tankers and petroleum products such as naphtha (liquid fuel) and fuel oil exports from Europe to Asia – about 20 percent of Asian oil – are delivered from the Mediterranean and Black Seas via the Suez Canal. They will also be affected if the channel remains blocked for several weeks.
The congestion at Suez, when it is eventually unblocked, will in turn lead to further congestion and disorganization as ships pour into ports already overstretched by the effects of the coronavirus pandemic.
The Suez Canal event also comes amid severely strained supply chains, including widespread shortages of semiconductors, a key component in cars, smartphones, computers, tablets and televisions.
There was also last month’s brutal winter storm in Texas, as well as a slowdown in plastics production and a large backlog of cargo ships at major Southern California ports.
The blockade of the Suez Canal threatens to further intensify geopolitical tensions under conditions in which multiple flashpoints exist and multiply.
Ships forced to make their way from the Red Sea to the Cape of Good Hope in South Africa face the threat of piracy off the coasts of East and West Africa.
Recent months have seen an increase in the number of pirate hijackings, prompting several shipping companies to call on the United States Navy to provide an escort.
Russian Foreign Ministry official Nikolai Korchunov argued for the need to develop new shipping routes, including the northern sea route through the Arctic Ocean, which is itself the focus of growing geopolitical conflicts.
This is as neighboring countries seek to assert their territorial claims to secure access to the vast energy reserves and rare materials and resources believed to be in the Arctic region.
Today, the global nature of capitalism is beyond dispute, as is the reactionary nation-state system that is driving the world’s major capitalist powers ever closer to global war and increasing social inequality at home, while preparing dictatorial forms of government.
Capitalism has demonstrated time and time again that it is impervious to science and reason, criminally irrational, and adamantly opposed to solving any social problems, even as it demands ever fatter profits.
The coronavirus pandemic, which has already killed 2.7 million people worldwide, only confirms the need to abolish the capitalist system and replace it with an internationally coordinated, rational and scientifically oriented economic planning system based on equality and the satisfaction of human needs: socialism.
Translation: SM
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