The Longterm Effects of The Suez Canal Blockage

The Longterm Effects of The Suez Canal Blockage

Jozlyn Jorgenson, Assistant Editor

Trade is a very important part of America’s economy. It allows for not only economic growth, but also lowers product costs. On top of that, trade connects countries together, benefiting all.

On March 23, 2021, the Suez Canal was blocked by the Ever Given, a Golden class container ship. The ship was stuck for about 6 days, preventing hundreds of other ships from traveling through the canal.

The Suez Canal is one of the major trafficways of world trade; it carries about 12% of shipping traffic. When the canal was blocked, there were repercussions which were exacerbated by the already struggling pandemic economy. Douglas Kent, executive vice president of strategy and alliances at the Association for Supply Chain Management said to the Washington Post that, “[T]he knock-on impact is not going to be measured in days or weeks. It’s going to be measured in months.”

Hundreds of ships were prevented from traveling to their destination when the canal was blocked. They either had to wait out the blockage, or travel another route. Each of these ships were carrying products that are meant to be bought and sold. When they did not arrive when they were supposed to, it caused some shortages.

While the blockage will mostly affect Europe and Asian countries, it will have a trickle-down effect to other countries. If companies do not get the parts and goods they need, they will be unable to create and sell to the consumers, some of which are from other countries. This could be for anything, from oil to semi-conductors that already have a shortage. Consumers might be unable to buy some products for a bit, or have to buy them at a higher price, while the trade system gets back on track.

Because other trade routes were still open at the time the Suez Canal was blocked, it is unlikely the increase in some product prices will be extreme. This, combined with a healing economy, where people are starting to get back into pre-pandemic habits, means that there will likely be a decrease in orders for products that need to be shipped.

While the effect on the American economy will not be too great, trade will be off for a while. So be prepared for delayed shipping.