On March 27th Bloomberg.com states that the blockage of the Suez Canal by the Ever Given ship was due to the wind and that as a result, this has “left $10 billion worth of goods with nowhere to go”. The claim turns out to be mostly true.
While the statements are correct, there are other important facts that are missing from the publication and that should be considered as well. Bloomberg does not state their primary sources, nor are the facts substantiated. Expert opinions are sought to comment on the incident. Therefore, this factcheck examines the origin and authenticity of the claims.
The wind is one of the reasons for the blockage
There are many factors for the blockage, not only strong winds and sandstorms. We are given the primary source, which is the Suez Canal Authority, that said: “a lack of visibility in adverse weather led to the ship losing control and drifting”. However, the link sends us to a page that does not exist. Nevertheless, we researched their official website for similar publications. Unfortunately, nothing about the statement was shared there. In addition, we noticed that very little information related to Ever Given was published on the site. The main highlight is how the authority managed to bring the accident to a positive end.
When deciding the reason for the blockage, there are a couple of more complex operations happening. We have the logistics of how the enormous boats are functioning in pretty slim and confined dimensions. Also, certain decisions and actions have a huge impact on the boat, leading to the end situation. In addition, there is always a potential risk of human error. It is worth mentioning that there are many intriguing effects in the water, we have the bank effect ending with the spinning result.
We investigated German sources as well. Björn Blaschke, head of the ARD radio studio in Cairo, which is part of Germany’s regional public-service broadcasters, states that there was a power failure onboard, followed by a storm and poor visibility that probably threw the ship off course, according to the Egyptian Suez Canal Authority. This once again cannot be checked, as the primary source is inaccessible.
Beyond everything, we have to note that in the article it is clearly said that this statement is only based on the initial investigation suggestions. So we cannot tell that the statement is misleading, however we need more information on the matter in order to paint the whole picture.
$10 Billion of global trade is lost as a result
The award-winning journalist Richard Meade from the shipping industry’s most sophisticated source of online news, analysis and insights – Lloyd’s List, is the first one to state that the blockage of the Suez Canal would cost around $10 billion worth of global trade. That equates to $400 million and 3.3 million tons of cargo an hour, or $6.7 million a minute.
Few days after the initial report, Bloomberg stated “A Desert Wind Blew $10 Billion of Global Trade Off Course”. While it is true, Bloomberg does not state their primary source, nor are the facts justified. The reader can easily be misled into thinking that this is in fact the value of the goods transported on the Ever Given itself.
Furthermore, we should also consider other facts when deciding what impact the blockage would have on the economy. For example, The Suez Canal Authority chief Osama Rabie estimated the Canal’s revenues were taking a $14m-$15m hit for each day of the blockage. Later on, Rabie also stated that the SCA would insist on further compensation for reputational damage and for successfully salvaging the ship.
To consider other viewpoints, we turned to German experts. According to Allianz SE, a German multinational financial services company, each day of immobilization could cost global trade $6-10 billion. Both sources, Allianz SE and Lloyd’s List, give us a key detail that $10 billion is the loss per day, while in Bloomberg it seems like an overall loss. Allianz SE also highlights the important role of the Suez Canal in the trade of goods between Europe and Asia, saying that the gateway has welcomed over 19,000 ships in 2019, or 1.25 billion tons of cargo. As a result, BBC Business Correspondent Theo Leggett reports that the cost of shipping goods to Europe is expected to rise.
Even though it sounds like a metaphor, the winds really did “blow” $10 billion of global trade.
While it is true that the wind is a reason for the blockage, it is not the only one to weigh on the decision that the statement in Bloomberg is mostly true. Taking the effects from certain decisions and actions into consideration, as well as the bank effect ending with the spinning result, a blockage has been formed. Thus, no ships could navigate through the Suez Canal, which leads to delays and this is the reason for the loss of global trade. However, when deciding what impact the blockage would have on the economy we also have other factors to consider, and that contributes to the conclusion of the claim is mostly true.
In short, the cause for the blockage of the Suez Canal is complex, as well as the effects from it. The wind is partly to blame but it is not the ultimate reason. The impact it had on global trade is enormous, but it is yet to be determined how much the sum will grow as lawsuits arise. Therefore, the claim is mostly true.
RESEARCH | ARTICLE © Vesela Dzhambazova, Olya Stoyanova, Elena Hristova, Melani Porcheva by Sofia University “St. Kl. Ohridski”, BG
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