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The build-up of ships waiting at the just-reopened Suez Canal could trigger a capacity plunge of up to 30 percent in the comings weeks, according to Maersk, and experts project weeks and months of turmoil in the container sector.

Although the Ever Given was finally refloated on Monday and towed out of the way – which allowed traffic flows to resume through the Suez Canal – in order to account for the continued delays, blank sailings are the only option to bring schedule reliability back in line.

However, before officially blanking sailings, Maersk is waiting to see concretely how many ships can transit the canal on a daily basis now, and how much congestion will hit ports further on in the Mediterranean and in Europe generally.

From a global perspective, Sea-Intelligence Maritime Analysis noted in its latest weekly newsletter that the Suez blockage would absorb an amount of carrying capacity equal to 6 percent (or 1.48 million TEU of capacity) of the globally available container vessel capacity.

With almost 400 ships held up at the canal, clearing the backlog will be a slow process. Maersk expects it will take a week to clear the stranded ships, while Hapag-Lloyd said Monday it believes it will take three to four days before traffic returns to normal. Additionally, MSC warned it would face a capacity crunch as a result of the Suez blockage, but provided no details.

Maersk has also announced that at as a result of container shortages caused by the Suez Canal incident, they plan to temporarily suspend accepting bookings moving via FAK/Spot rates, as well as short term contracts for this week, and in the immediate future on selected trades. See the announcement here.

Saturated Air Freight Market Provides No Alternative

Often times when supply chains see extended delays, one of the first options for time-critical shipments is airfreight. Unfortunately, those who are looking for air transport to avoid the Suez Canal disruption will be hard pressed to find any spare aircraft.

Freighters are simply sold-out, and options are limited. Capacity tightness out of Asia has gotten severe in the past couple weeks; mainland China and Hong Kong rates to the U.S. are rising. Departures from Taipei, Taiwan; Bangkok; and Ho Chi Minh City and Hanoi, Vietnam, are seeing end-of-quarter surges that are expected to continue through April. Korean Air has no availability until at least mid-April, and Cathay Pacific is sold out until May.

However, as more people receive COVID vaccinations, there is a potential for increases in passenger traffic, and associated belly capacity, which would bring some relief to the tight market.

Beyond the loss of capacity, we expect severe port congestions as ships will be arriving out of their slotted time, leading to adjusted rotations to limit the overall net loss of ocean network capacity. Mallory Alexander is continuing to monitor the situation and providing updates to clients who may be experiencing delays. Please reach out to your Mallory Representative with further questions.

Sources: JOCShippingWatchFreightwaves