Suez Canal choked by giant container ship disrupting a key food and fertiliser trade route

The worlds largest container ship, the Ever Given has blocked the narrow Suez Canal this morning. Travelling from China, the giant ship was due to be travelling onwards to Rotterdam in the Netherlands. However, it appears that the ship lost power, and in windy conditions drifted sideways, blocking the canal.

According to data from the US Energy Information Administration almost 10% of total seaborne oil trade and 8% of global LNG trade passes through the Suez Canal. Although attention naturally focuses on the risk to energy supplies, the canal also provides a major route by which agricultural products (both grain and fertiliser) move between Europe and Asia.

The Suez Canal is especially important for the shipment of wheat and rice, accounting for 15-17% of global trade according to analysis by Chatham House (Chart 1). The share of corn and soybeans transiting via the canal is typically much less, at around 5%.

Chart 1: Annual maritime choke point throughput of maize, wheat, rice and soybean as a share of total trade

The maritime juncture is perhaps even more critical for the global fertiliser trade. Almost one-third of potassium chloride – the most heavily traded fertilizer – transits through the Suez Canal (Chart 2). These flows are dominated by China-bound shipments from Belarus, Russia and Canada, China being the second-largest importer of potassium chloride after the US.

Chart 2: Share of global trade in fertilisers passing through key maritime chokepoints

It’s unclear how long the canal will remain blocked. But at a time when maritime logistics are already significantly disrupted by the events of the past twelve months this latest event is likely to only add to the cost of shipping and increase pressures on governments to diversify sources of commodities they depend upon.

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