DISRUPTION

Kenya firms worried over Suez Canal blockage

Giant cargo vessel– Ever Given has been blocking Egypt's Suez Canal since Tuesday.

In Summary

•The 400 metres-long vessel became wedged across the canal after being blown off course by high winds.

•By yesterday, more than 150 ships were waiting to pass through the vital waterway, according to official reports.

Containers being offloaded from a ship at the Port of Mombasa .
BUSY: Containers being offloaded from a ship at the Port of Mombasa .
Image: JOHN CHESOLI

Kenyan manufacturers are concerned their could be delays in delivery of raw materials from global markets and export of cargo from Mombasa, following the blockage at the Suez Canal.

Giant cargo vesselEver Given operated by global shipping firm Evergreen has been blocking Egypt's Suez Canal since Tuesday.

The 400 metres-long vessel became wedged across the canal after being blown off course by high winds.

By yesterday, more than 150 ships were waiting to cross the vital waterway, according to official reports.

About 12 per cent of global trade passes through the 193km-long canal, which connects the Mediterranean to the Red Sea and provides the shortest sea link between Asia and Europe.

The 200,000 tonne ship was bound for the port city of Rotterdam in the Netherlands from China, and was passing northwards through the canal on its way to the Mediterranean via the Red Sea.

It ran aground and became lodged sideways across the waterway at about 07:40 local time (05:40 GMT) on Tuesday.

We hope the ship is moved within the shortest time possible to avoid delays. If ships have to go around Africa, it will increase logistics costs
Kenya Association of Manufacturers Chairman,  Mucai Kunyiha

A flotilla of eight tug boats resumed efforts to dislodge the Ever Given at high tide on Thursday morning after stopping overnight, Egyptian officials said.

The head of a specialist salvage company assisting the operation warned that it could take weeks to move the vessel and that containers might have to be lifted off to lighten its load.

Kenya Association of Manufacturers (KAM) Chairman  Mucai Kunyiha said delays in clearing the channel could force vessels to re-route through the North of Africa and other routes, which will cause delays in arrival of raw materials.

This could disrupt production by local manufactures.

The longer route will also add to the cost of shipment, an element that will lead push up the cost of goods in the local market, Kunyiha said.

We hope the ship is moved within the shortest time possible to avoid delays. If ships have to go around Africa, it will increase logistics costs,” Kunyiha said told journalists in Nairobi.

This will add pain to the already existing shortage of containers in the global supply chain which has affected import and export patterns by local manufacturers and traders.

According to KAM, the container shortage has mainly been witnessed in key markets of China (leading import source for Kenya) and India which is the second key import source for the country.

The shortage has been caused by delays in the logistic chain occasioned by the Covid-19 pandemic.

These include delays in returning of empty containers to the ports, as witnessed in the East Africa region, where transit time between Mombasa and key destinations of Uganda, South Sudan, DR Congo and Rwanda more than doubled since the pandemic struck.

Truck turn-around time between Mombasa and Kampala for instance, has increased from an average of 3.7 days to about 10, the time a truck takes to deliver cargo to Kampala and return to the Port.

This is as a result of measures put in place to mitigate the spread of the virus, including testing for the Covid-19 virus.

The Japanese owner of the stalled ship has since apologised for the disruption to global trade.

Shoei Kisen Kaisha said shifting the Ever Given was proving "extremely difficult", but that it was "working hard to resolve the situation".

In 2017, a Japanese container vessel blocked the canal after it ran aground following reported mechanical issues. The Egyptian authorities deployed tug boats and the ship was refloated within hours.

The Suez Canal is an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea through the Isthmus of Suez; and dividing Africa and Asia.

Constructed by the Suez Canal Company between 1859 and 1869, it officially opened on 17 November 1869, with a depth of eight metres, a width of 22 metres at the bottom, and 200 61 to 91 metres wide at the surface.

Several routine expansions and dredging have however been done over the years, with the channel remaining a key transit route for vessels moving from the North and Asia to the East and South African ports.

East Asian country of China is the dominant import source market for Kenya with last year's imports into the country totaling Sh361.5 billion, a slight drop from Sh376.7 billion the previous year, as a result of the Covid-19 pandemic disruption on global supply chain.

India is the second import source for Kenya with the value of imports last year growing by 5.4 per cent to Sh188.6 billion.

This is up from Sh178.9 billion the previous year, most probably driven by  increase in pharmaceutical imports during the pandemic, where India remains a key source.