The Suez Canal is bleeding money with large volumes of “bunching” at ports and terminals as the Red Sea crisis—now stretching beyond 450 days—continues to wreak havoc on the global supply of timber. That is according to Abdel Fattah al-Sisis, Egypt’s President, who claims that the blockage caused year-over-year revenue in the Egyptian-controlled canal to nosedive by 60% last year— or more than US $7 billion.
It comes as Egpyt is looking to expand the canal’s width from 72km to 82km following a successful two-way trial late last month. Once implemented, it will expand the Suez Canal and prevent a repeat of the disastrous Ever Given grounding, which in 2021 brought the busy thoroughfare to a standstill. According to the Suez Canal Authority, the body responsible for managing traffic through the canal, the expansion will “boost the channel’s capacity by as many as eight ships a day, enhancing its ability to handle (future) potential emergencies.
In October, Wood Central “vessel bunching” —defined as the number of sailings in a given week exceeding scheduled services—is skyrocketing, with the busy Northern Europe and Asian routes responsible for more than 70% of the trade in bulk timber products, amongst the most impacted by congestion.
“While the offered capacity may be the same over two weeks, i.e., no vessel sailing in one week followed by two vessels sailing the next week, having two vessels depart in one week and zero vessels in the second week results in an extraordinarily high workload in one week and none in the second week,” according to Alan Murphy, CEO of Sea-Intelligence.
“This increases the risk of port congestion – and as a ripple effect, a similar crunch on truck, rail, and barge capacity use. Vessel bunching can, therefore, be seen as a proxy measure for the pressure on ports and the corresponding likelihood of congestion problems,” he said.
As one of the most traded products on earth, more than US $188 billion worth of timber products are traded from country to country and port to port, with a large portion of this ‘bulk trade’ occurring on open waters. As a result, the global supply chain for timber products—used to build some of the largest buildings in the world—is highly vulnerable to geopolitical turmoil along the shipping network. According to the World’s Top Exports, the crisis has impacted the US by up to $50.8 billion of sawn wood, with China among the most affected. The big six—including China, Canada, Russia, Sweden, Germany, and the US—are responsible for over 70% of exported timber that widely uses the seaway; however, the impacts are being felt wider, with Australian-bound timber tied up in the bottleneck.
- To learn more about the Red Sea crisis and its impact on timber supply chains, click here for Wood Central’s special feature.