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Suez Canal — Everything About Supply Chain

Suez Canal is an artificial waterway located in Egypt that connects the Mediterranean Sea to the Red Sea. However, how important is it in the supply chain?

In this article, we will discuss what the Suez Canal is. We will tell you its importance in the supply chain and how the blockage severely impacts the supply chain. Additionally, we will tell you the lessons you can learn from it.

Once you are done reading this article, you will know how important the Suez Canal is in international trade. So without further ado, let us now start!

Suez Canal: What is it?

The Suez Canal is a man-made waterway located in Egypt that connects the Mediterranean Sea to the Red Sea, providing a shortcut between Europe and Asia.

It is one of the world’s most important shipping routes and plays a crucial role in global trade, as it allows ships to avoid having to sail around the southern tip of Africa to reach their destinations, which can be a lengthy and expensive journey.

The canal is approximately 120 miles (193 kilometers) long and 300 meters wide, and it has no locks, which allows ships to travel through it without having to stop.

Today, the Suez Canal is owned and operated by the Suez Canal Authority, a government agency responsible for maintaining and operating the canal.

It is open to all shipping traffic, and more than 50 vessels pass through it each day, carrying goods such as oil, natural gas, and manufactured products.

The Importance of the Suez Canal in the Supply Chain

Before the Suez Canal was built, ships had to sail all the way around the bottom of Africa. This journey was very dangerous and took a long time, sometimes several months. The Suez Canal provides a shorter and safer route for ships to travel between Europe and Asia.

By using the canal, ships can save a lot of time and money. They do not have to travel thousands of extra miles, which means they do not use as much fuel and can get to their destination faster.

This is good for companies because it makes shipping cheaper and faster, which means they can get their products to customers more quickly.

The Suez Canal is very important for companies that sell products around the world. It connects Europe, the Middle East, and Asia, which are all important markets. However, if there are any problems with the canal, like if a ship gets stuck, it can cause delays and make shipping more expensive.

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The Blockage in Suez Canal

In March of 2021, a 400-meters long Ever Given container vessel was stuck in the canal, suspending traffic of containers transporting goods, parts, and equipment through the shortest sea route between Europe and Asia.

The ship got stuck in the Suez Canal because of a sandstorm, and it blocked other ships from passing through.

People tried to get the ship unstuck, but it took six days to move it out of the way. This caused a lot of ships to pile up and wait to pass through the canal.

This was a big problem because the Suez Canal is an important way for goods to travel between Europe and Asia. It made things more expensive and slowed things down for businesses that use the canal to ship their products.

After six days of trying, people were finally able to move the ship out of the way and traffic started moving again.

However, this situation showed that there are risks involved with using the canal and that it is really important for businesses that sell products all over the world.

The Lessons We Can Learn From The Suez Canal Blockage

1. Better forecasting

Everyone involved in the maritime industry should try to predict potential problems more accurately.

They should identify how much damage might be caused and how long it might take to fix things. For example, in the situation regarding the blockage, they should focus on the weather and the size of the canal.

They also need to think about the size of the ships using the canal. The global shipping industry must make a comprehensive list of possible risks. Additionally, even small disasters should be taken seriously and used as warnings for future incidents.

2. Alternatives to the Suez Canal

The only other option besides the Suez Canal is a longer route around Africa. But the biggest problem with this route is piracy.

For many years, pirates in Somalia have attacked merchant ships, and many shipping companies are worried about this risk.

Although the threat from Somali pirates has decreased, it has not gone away completely. Piracy is still a problem in other parts of West Africa and the Gulf of Guinea.

3. Risk management and security must be improved

The shipping industry has to reduce the dangers related to huge container ships. It is even more important for places like the Suez Canal or the Panama Canal, which are narrow.

If a container ship blocks one of these canals, the ports need to be able to send help quickly. Also, there should be rules that prevent really big container ships from going through really narrow waterways. They should check the weather first to make sure it is safe for a ship to enter a canal.