What Egypt’s shipping disaster means for Chatham

BY D. LARS DOLDER, News + Record Staff
Posted 3/31/21

After almost a week lodged in muck and obstructing the entire Suez Canal, the Ever Given — a gargantuan Japanese container ship — finally made berth on Monday, permitting resumption of traffic …

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What Egypt’s shipping disaster means for Chatham

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Posted

After almost a week lodged in muck and obstructing the entire Suez Canal, the Ever Given — a gargantuan Japanese container ship — finally made berth on Monday, permitting resumption of traffic through one of the world’s most consequential shipping passages.

The lumbering leviathan made international news last Tuesday when its operators, apparently disoriented by a sandstorm, crashed into the waterway’s bank near its southern entrance. The ignominious crisis made prime fodder for social media goons, but real-world implications aren’t as funny as meme-iacs would have you believe.

More than 10% of all global trade makes its way through the Suez Canal, including about 7% of the world’s oil, according to the Associated Press. About 400 ships were relegated to an aquatic melee awaiting eventual passage after an army of tugboats and excavators could free the Empire-State-Building-sized vessel. Other ships channeled their mid-19th Century predecessors and rerouted around the Cape of Good Hope at Africa’s southern tip, sailing an extra 3,100 miles to reach their destinations.

The result: a tremendous backlog of vital goods that could affect us even here in Chatham, more than 6,000 miles from the scene of disaster.

“Basically anything you see in the stores” could become temporarily scarce, Lars Jensen, an independent container shipping expert based in Denmark told NBC. Affected goods might include such things as “food, furniture, clothes, shoes, exercise equipment, electronics, car parts and carpets,” the report said.

That doesn’t mean you should go hoard toilet paper as per March 2020’s misguided best practices. Most delayed ships were headed for Europe, not the U.S. Still, we’re likely to feel the ripple effect.

“The disruptions from the closure of the Canal could last for months,” Indian journalist P Manoj wrote in The Hindu Business Line after the ship was already freed. “... Port congestion, equipment shortages and capacity shortages on ships are set to intensify.”

The shipping contretemps spotlights what the pandemic had already exposed: global infrastructure is fragile. Vital networks of product conveyance can be thrust into chaos by minor hiccups in the system. A sea captain misgauges his clearance and international trade is deadlocked.

“We’ve gone to this fragile, just-in-time shipping that we saw absolutely break down in the beginning of COVID,” Capt. John Konrad, the founder and CEO of the shipping news website gcaptain.com, told the AP. “We used to have big, fat warehouses in all the countries where the factories pulled supplies … Now these floating ships are the warehouse.”

Unlike real warehouses — which can be expanded and modified — ships have limited and discrete capacities. Goods are stored in shipping containers, and shipping containers are in short supply.

“They don’t have enough containers and it really slows down import,” Mark Stover, owner of Pittsboro’s Vortex Roasters, told me back in summer. His company purchases coffee beans from around the world, but many distributors are unable to move their products. Harbor shutdowns and shipping moratoriums during the pandemic’s worst months dried up access to shipping containers, and the problem has yet to resolve.

“Before the Suez Canal disruption, we were expecting the container situation to get worse in April because we were already seeing the scarcity of containers,” Jon Monroe, maritime trade and logistics consultant with Jon Monroe Consulting, told CNBC. “This Canal closure will not help. You will start to see product piling up on factory floors.”

Transportation and shipping companies are scrambling to mitigate ramifications of the Suez Canal incident, but getting back to the way things were isn’t good enough. International trade needs significant reform to preempt similar future issues.

Realistically, that might not happen. But business owners and shoppers alike can sidestep the issue.

“I know some manufacturers might be hurt by (the Suez Canal issue) in this country,” Ronnie Murphy, CEO of Siler City’s Lazar Industries, told me. “But that doesn’t happen to be the case for us.”

Why?

“We import very little,” he said. “Most of the raw materials that we use are made within the United States.”

Of course, international trade will remain indispensable. Business owners such as Stover cannot replace their goods with local wares. But those who can should. The Ever Given — and the bigger catastrophe that could have been — should offer enough incentive.

“It just shows the value of doing things local,” Murphy said.

Other business news

Unlike most industries in the last year, real estate has boomed. Home sales hit new peaks amid the pandemic, matching highs last seen in 2006.

One local realtor, Pittsboro’s Eric Andrews, has been especially successful. His accomplishments — specializing in land real estate sales — were recognized last month at a special awards ceremony of the Realtors Land Institute. Andrews was inducted into the 2020 APEX Producers Club, which requires members to have at least $4 million of qualifying dollar volume in closed land sales.

“We are proud of Eric Andrews and all of our members that were recognized as part of our award programs for their accomplishments in 2020,” RLI CEO Aubrie Kobernus said in a press release. “... They really are the cream of the crop when it comes to land real estate professionals.”

Andrews facilitated the sales of several land tracts in the last year, many of them exceeding 100 acres and selling for more than $1 million.

“2020 was a trying year, but strong for real estate sales in general and our best ever for large tracts of land,” Andrews said at the ceremony, which was held virtually. “This award reflects a team effort from all of my staff.”

Have an idea for what Chatham business topics I should write about? Send me a note at dldolder@chathamnr.com or on Twitter @dldolder.

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