Most of the widely circulated data about the attacks on ships bound for the Suez Canal are about the value of the cargo per annum and the expense for ships to be rerouted to the Cape of Good Hope, which can cost as much as $1 million per vessel and adds ten days to the journey. Less well known is the value of the ships themselves and the cargo each one carries. The largest ships have cost nearly $100 million to build, and because of a shortage of ships, that value has risen for ships built two decades ago.
According to Lloyds, a total blockage of the Suez Canal would delay trade worth $9 billion per day. Viewed another way, according to the U.S. Naval Institute’s data on Suez, “Today’s shortest sea route between Southeast Asia and Europe, the Suez Canal carries 12 percent of global trade.”
The Large Economic Picture
The effect of ships diverting from the canal to longer routes exceeds their cargo value. The cost of tight supply chains was triggered recently by the COVID-19 pandemic. Those effects on inflation were catastrophic. Another event could cause a nearly identical problem. Among the prices that rise the most quickly are those of crude. In the last three days, the price per gallon has risen about $6 to $80. There is worry that as the US and UK attack the Houthi rebels, a greater conflict will arise. More and more shipping companies will avoid the area for fear of significant damage to or sinking of their ships.
The value of tankers and container ships is huge. The largest oil tanker in the world is the Euronav Oceania, a ULCC (ultra-large crude carrier), built in 2033 in South Korea by Daewoo Shipbuilding and Marine Engineering for the shipping corporation Hellespont. The ship was delivered for $90 million price. Shortages of ULCCs mean that the value is higher now. These double-hull ships have deadweights of 550,000 tons and are over 1,500 feet long. They can carry up to four million barrels of oil, which, according to Maritime Page, is about the daily consumption of seven million people. The value of that crude tonnage at current market prices is about $320 million.
If a ULCC is attacked and sunk, the price tag could be over $400 million.