hardhat
Wednesday, 14 April 2021

The needed infrastructure upgrades to avoid a Season 2 of Ever Given

What infrastructure upgrades does the Suez Canal need to avoid an Ever Given Season 2? In just six days, the Ever Given’s mishap in the Suez Canal cost Egypt around USD 90 mn in foregone revenues, Suez Canal Authority (SCA) boss Osama Rabie told Ala Masouleety’s Ahmed Moussa. The SCA is currently considering an expansion at the southern section of the canal where the Ever Given got stuck, Rabie recently announced. This prompted us to ask logistics insiders what other infrastructure developments need to be implemented, in order to avoid another Ever Given mishap. More dredging, high-capacity equipment and a parallel railroad track were all recurring suggestions, our sources tell us.

Background: So what actually happened to the Ever Given? Initial reports indicated that the 400-meter-long vessel got caught up in a dust storm on 23 March, causing it to float sideways and hit the canal’s embankment, finally settling diagonally across the canal. Dredgers were used to remove sand from underneath the ship and mud that was caked to its port side. With the help of a rising tide, the ship was finally freed after six days. Depending on the severity of the grounding, the salvage and re-floating of this type of ship is a complex operation, requiring specialist equipment and potentially a lot of time, the World Economic Forum stated. Around 420 ships were stuck on either end of the canal, unable to deliver their shipments, costing the world over USD 9 bn a day, the ripple effects of which will most likely be felt until the summer, the Wall Street Journal reported. A formal investigation is ongoing to determine what exactly happened on board the ship, and is expected to wrap up by the end of the week. Meanwhile, the SCA has demanded the owner of the ship to pay USD 900 mn in compensation, and has obtained a court order to seize the ship until it receives payment, Al Shorouk reported.

The canal’s infrastructure has in fact been seeing upgrades in the past few years. This included the expansion of berths, ports, and the establishment of transit stations, head of the Alexandria Navigation Chamber Mohamed Moselhy tells us. These upgrades increased the volume of transit across Egypt, with the canal seeing the movement of 4.8 mn containers in 2020, up from 4.4 mn in 2019, according to a sector performance report issued by the Transportation Ministry. The SCA is looking to get the canal’s regular daily capacity to 95 vessels by 2030, Rabie recently said.The establishment of container terminals and unloading berths will even further increase the circulation of goods in all Egyptian ports, not just the Suez Canal, Moselhy believes. But further steps need to be taken in order to avoid another Ever Given-like disruption, vice president of the Arab Academy for Science, Technology and Maritime Transport (AAST) Mohamed Daoud says.

Expansion of the dredging works on the canal edges: A lot of work was dedicated to dredging in the past years during the establishment of the New Suez Canal, Daoud tells Enterprise. Although it is unlikely that a second grounding incident will happen, the dredging process needs to continue in order to widen the shipping route, he explains. Dredging means removing sediments and debris from the bottom and edges of the canal, such as silt and sand. This is a necessary routine because it increases the depth of the canal, allowing the safe passage of large ships and vessels. Today, the depth of the Suez Canal stands at 24 meters, which is sufficient for the crossing of giant ships. However, further dredging works need to be done on the edges of the waterway to avoid another Ever Given situation, Daoud explains.

Purchase of high-capacity tugboats and equipment: In the Ever Given saga, it took a few days until Italian and Dutch tugboats arrived to help handle the situation. Hence, some have suggested that the equipment of the SCA needs to be updated and expanded in order to be able to handle these situations in a faster manner and not rely on hired boats to arrive, member of the International Maritime Transport Division at the Egyptian Chamber of Commerce in Alexandria Ahmed Mostafa says. Additionally, there was no readily available equipment to offload some of the Ever Given’s weight, United Nations International Maritime Organization advisor Michael Kingston told Reuters. El Sisi already pledged to purchase new equipment and boats for the Suez Canal, and called on ministers to immediately sign off on any needs by the SCA, and new tugboats, dredgers, and cranes are already on the shopping list.

Parallel railway track: To relieve the pressure on the Suez Canal, some are suggesting expanding the railway infrastructure running alongside the waterway. While a railway running from the ports of Sokhna and Suez to Alexandria already exists, it needs to be expanded, Mostafa says. It can then be leased to private companies who can provide the vehicles needed to transport goods. The operation of the railroad will therefore not require heavy government funding. Given the rise in oil prices since the Ever Given mishap, small shipping companies may find the transit fees of the canal too high. A functioning railway would allow them to move their goods to Alexandria via trains, which is much cheaper, Mostafa states. It would also reduce the pressure on the canal’s infrastructure and provide the state with profitable returns.

Safety measures: While the past years have seen new safety measures implemented in the canal, additional measures are needed, owner of Saratoga Maritime Transport Agency Ahmed Al-Saeed tells Enterprise. Such measures could include urging the ships to shut down their machines upon entry and depending on the SCA’s tugboats to pull ships through the canal.

Maybe some cybersecurity? The canal’s IT and communications systems could be vulnerable to hacks and cyber attacks, former senior director for Middle East and North African affairs at the US National Security Council Robert Greenway recently wrote in a Bloomberg Opinion piece. Greenway points to recent cyber attacks on industrial control systems, saying that the canal is vulnerable to similar hostility because of its “antiquated” IT architecture.

Is global shipping growing at a faster rate than our infrastructure? Worldwide, about 11 bn tons of goods are transported by ship each year, which represents 1.5 tons per person, based on the current global population, according to the International Chamber of Shipping. To stay competitive, companies are increasing the sizes of their ships to be able to handle more cargo. “The [Ever Given] incident […] highlights that as ships get larger and more complicated, their reliance on narrow shipping routes constructed in an earlier age looks increasingly risky,” the World Economic Forum writes. Adding to that, there remains the question of whether ports are equipped to handle that much cargo unloading. It remains to be seen whether Suez Canal infrastructure developments — if they happen — will be enough to handle these global concerns.

Your top infrastructure stories for the week:

  • Suez Canal: The Suez Canal Economic Zone (SCZone) has signed a long-term syndicated loan worth EGP 10 bn to finance infrastructure projects.
  • Railway funding: AfDB has approved a EUR 145 mn loan to finance railway upgrades to enhance rail safety through the Egyptian National Railways Modernization Project.
  • Railway manufacturing: The Arab Organization for Industrialization’s SEMAF railway factory will manufacture and supply 1k railway trucks within four years under an agreement signed with the Egyptian National Railways.
  • Natgas transition infrastructure: Egypt is doubling its natgas filling station target to 1k by the end of the year under a government-backed program to expand natgas refueling infrastructure nationwide.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.