How does the evergreen impact the economy?


I’ve seen plenty of memes talking about how the ship being stuck is f*cking the encino my, but how does it? Or is it bullshit?

In: Economics

A lot of trade happens between Europe and India, China, Malaysia, Japan, and other countries in the Pacific/Indian Ocean.

Almost all of that trade in goods goes through the Suez Canal.

Delaying deliveries by a week can cause factories to shut down, orders to be late, stores to not have stock, etc.

The Suez Canal is one of the most used waterways as it lets you get from the Atlantic Ocean, through the Mediterranean into the Indian Ocean. This cuts short a route that otherwise leads aaaall the way around Africa. So that canal being blocked for 6 days means a lot of container ships had to wait or take a detour with goods from Asia to Europe and America. This will have some effect on the availability and price of goods that are shipped along that route.

A lot of shipping that operates nowadays operates on very tight timelines. Factory A needs materials on April 4th, so the delivery is scheduled and sent out so that it arrives on April 3rd. The delivery assumes that the cargo can go through the Suez Canal.

Now, with the Ever Given (Evergreen is the company, Ever Given is the ship) blocking the canal for 6 days, the delivery is delayed. Now, Factory A can’t operate between April 4th and April 10th because they have no material. That means the factory is making no product, so they can’t sell as much this quarter. Their earnings are lower, so they maybe cut bonuses or give smaller raises at the end of the year.

Repeat this for however many companies were affected, and you’ll see that there will definitely be an impact on the economy. How bad, I don’t know, but you can’t block one of the most transited transportation routes for about a week without people missing their delivery deadlines and the knock-on impacts from that.

Basically, that canal connects Europe and Asia. The British and French originally used it to easily stay close to their colonies (India and Vietnam) in eastern Asia, hence why the Suez Canal Crisis was so momentous when Nasser of Egypt nationalised it, but even to this day, a lot of cargo goes through that canal, 10% of the worlds shipping. (Planes are too expensive, and cant carry as much) so the fuel it would cost for ships to go around the Cape of good hope would add thousands to the journey and about a week of time.