The Suez Canal is blocked. How will it Affect the Global Supply Chain?

How the Suez Canal’s Blockage will Affect the Global Supply Chain

Suez Canal blocked by Ever Given

The Suez Canal has been in the headlines recently because of a ship that has run aground and blocked the entire canal. The Ever Given isn’t just any ship either. She is a 400m, 219,000+ ton ultra-large container ship (ULCS). It was on its way from China to the Netherlands.

The Suez Canal is one of the most vital waterways in the world. Around 50 ships pass through the 120-mile canal each day. The Suez Canal connects Asia and the Middle East with Europe and the East Coast of the United States. The Suez Canal takes just 12 to 15 hours to navigate from the Middle East to Europe, compared to taking 8 to 10 days without the canal.

The Global Supply Chain

The Suez Canal has been blocked for three days and could take even longer to clear. Billions of dollars worth of goods are not able to get to their destination on time. Once the Ever Given is dislodged, the ports will be congested, causing even more delays. This event will most likely cause many to reevaluate their reliance on the global supply chain and condenser alternative, more technology-driven options.

Just-in-time shipping has been a recent trend in the global supply chain, cutting out extra time and increasing efficiency, but unforeseen situations like this show their faults. Many industries that rely on this sort of just-in-time shipping may be experiencing a shortage of supplies at this time.

Contracts

Because of the blockage in the Suez Canal, it is likely that many contracts have been breached due to delays. To avoid liability in future situations like these, make sure you have a force majeure clause in your contracts. Force majeure refers to events outside of reasonable control that prevent someone from fulfilling a contract.

Need help adding a force majeure clause to your contract? Contact us!

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