Without Shipping, the Global Economy Sinks
The Suez Canal blockade is a reminder that sea freight still keeps the global economy running—and leaders and consumers ignore it at their peril.
The superfreighter blocking the Suez Canal has been refloated, but the canal’s weeklong standstill has opened the eyes of the worldwide public to the vulnerability of global shipping. Billions of people depend on each cog in the shipping process for their livelihoods—it involves everything from oranges to machinery to port workers and complex software organizing each step—but ignore the many vulnerabilities until something goes wrong.
Indeed, the Ever Given’s highlighting of canal blockades is a useful reminder that many other mishaps can disrupt global shipping. During World War I, the British Royal Navy carried out a blockade of German-bound shipping so effective it caused starvation, and in 1967, then-Egyptian President Gamal Abdel Nasser closed the Gulf of Aqaba to Israeli shipping, a move that helped spark the Six-Day War. Consider the prospect of a hostile government spoofing vessels’ navigation systems. And what if China, the Philippines, Indonesia, or Russia stopped supplying the world with sailors?
In 1975, an average of 26.6 ships made their way through the Suez Canal every day. By 2019, the figure had virtually doubled, to 51.7 ships per day. And by 2019, the ships came laden with more oil, fruit, car parts, animals, grains, construction equipment, clothing, and basically every other item global companies and consumers need every single day—amounting to an average of 3,307 tons daily, compared to 240 tons in 1975.
Container ships have kept growing along with their cargo: The Ever Given is one of the largest container ships in the world and was stuck in the canal fully loaded, with 20,000 20-foot equivalent units (TEU) (roughly speaking, 20,000 shipping containers). “The blockage in the Suez is not a huge surprise to those of us in the industry,” said Cormac Mc Garry, a maritime analyst for Control Risks, a global risk consultancy. “We’ve been warning [of] a situation like this for a long time because container ships are getting so big. There are only a handful of ports in the world that can receive a vessel like the Ever Given.”
“The bigger the ships get, the bigger the risk,” Mc Garry said. In container shipping, margins are tight, and the cost of shipping is enormous, so having bigger ships makes sense for the company. Ten years ago, the biggest ships carried 10,000 containers; now, there are ships that carry more than 20,000 containers. It’s a ceaseless march.” Peter Sand, chief shipping analyst at BIMCO—the world’s largest trade body for the shipping industry—said container ships’ size could grow to 24,000 TEU.
Twelve percent of global shipping passes through the Suez Canal; marine shipping, in turn, accounts for 80 percent of the world’s trade in goods. If a ship gets stuck in the canal, an average of 51.7 ships would be held up every single day it stays there or the ships will have to turn around and take the much longer trip around the Cape of Good Hope. That’s precisely what has been happening. By the time the Ever Given was refloated, 372 vessels with loads of more than 10,000 TEU (plus additional smaller ones) were waiting to sail through the canal, while some—including the ultra-large HMM Dublin, with a near-24,000 TEU capacity—had unsurprisingly decided to sail toward Africa’s southern tip.
The Ever Given’s unintended blockade of the narrow canal has caused a profoundly sea-blind global public to take a sudden interest in global shipping, entertaining itself with memes featuring a tiny excavator next to the stranded Ever Given. But now that Egyptian officials’ and foreign experts’ desperate struggle to dislodge the 400-meter-long vessel bound for Rotterdam has succeeded, policymakers and regular citizens would do well to look beyond the narrow canal linking the Red Sea and the Mediterranean—because the world of shipping, which we are all so dependent on, harbors plenty of other risks.
“Shipping is a comfortably forgotten industry,” said Simon Lockwood, a shipping expert with the global insurance brokerage and advisory firm Willis Towers Watson. “Now, the Suez Canal is getting a lot of attention … There are incidents in other waters as well, which most people are simply not paying attention to,” he adds, noting only 12 percent of ships transit through Suez. “For example, there’s a huge increase in attacks on shipping in the Gulf of Guinea. In the Persian Gulf, an Israeli car carrier was allegedly hit by missiles a couple of weeks ago. There are a lot of proxy wars going on with vessels as targets, essentially constant attacks on the supply chain,” Lockwood points out.
The Israeli ship, traveling from Tanzania to India, drifted for several hours before being able to continue its journey. In February, another Israeli container ship was hit by an explosion in the Gulf of Oman. Israeli media reported that Iran was behind the former, and Israeli Prime Minister Benjamin Netanyahu blamed Iran for the latter. Predictably, Tehran denied the accusations.
Or consider GPS spoofing. In 2017, more than 20 ships in the Black Sea suddenly reported problems with their GPS signals. “Sometimes, position is correct. Sometimes is not. GPS sometimes loses position or displays inaccurate position. … For few days, GPS gave a position inland (near Gelendzhik Airport) but vessel was actually drifting more than 25 NM [nautical miles] from it,” one ship’s master (whose nationality and vessel have not been disclosed) informed the U.S. Maritime Administration. Who was interfering? Given that the spoofing took place in the Black Sea, Russia seemed a likely culprit. It has, however, said nothing. Why, apart from the chance of putting pressure on another country, would Russia mess with vessels in the Black Sea? One educated guess is it was testing a new form of electronic warfare.
GPS spoofing of naval and civilian vessels happens more often than land-dwellers would like to know. Among recent incidents listed by the U.S. Coast Guard’s Navigation Center, which responds to such incidents, was one between Malta and Sicily on Feb. 10. Three days earlier, another ship in the Mediterranean completely lost its GPS signal. And two days before that, another ship, traveling between Spain and Egypt, reported that its GPS signal was repeatedly malfunctioning.
GPS spoofing won’t send vessels completely off course. “Vessels have manual charts, and the crew knows how to navigate with traditional tools,” said Rory Hopcraft, a maritime cyber threats researcher at the University of Plymouth. “The bigger risk is more subtle navigation interference where the vessel ends up just maybe one degree off and perhaps takes a slight entry into another country’s territorial waters. The hostile country could then use this ‘trespassing’ to extort money or other things from the vessel’s home country.”
This seems to have been the case in 2019, when Iran’s Revolutionary Guard Corps seized the oil tanker Stena Impero in the Strait of Hormuz. Lloyd’s List’s intelligence unit subsequently established that the Swedish-owned, U.K.-flagged oil tanker had received spoofed Automatic Identification System signals that sent it into Iranian waters.
Most consumers are, it’s safe to say, not paying attention to the fate of the ships and sailors affected by such tricks. It’s equally safe to guess they’re not following news of vessels’ insurance. After the Stena Impero incident, insurance rates for ships passing through the Strait of Hormuz skyrocketed, and it turns out that most of the ships now stuck in the Suez Canal queue lack delay insurance. But consumers should care about both GPS spoofing and shipping insurance—only because their goods and they, themselves, could be affected.
And a few incidents causing delays and insurance hikes passed on to consumers wouldn’t be a bad thing because it would cause us land-dwellers to finally pay attention to the enormous world of shipping that supplies us with goods around the clock. (On March 29, 150 vessels were leaving the Port of Rotterdam—Europe’s largest port—while 124 were loading and unloading and 34 were arriving. That’s roughly 13 vessels serviced every hour.)
Today, the world’s ships, which employ nearly 1.7 million sailors, are primarily staffed by citizens of China (who mostly work on Chinese ships), the Philippines, Indonesia, Russia, and Ukraine, with India another major country of origin. The Japanese-owned Ever Given is crewed exclusively by Indians, and most of Stena Impero’s crew were Indians too. “Officers are highly educated and often come from Europe,” Mc Garry said. Indeed, life as a sailor means hard work, long absences, and mediocre pay. The sailors’ low pay is, of course, one of the reasons consumers can have goods shipped so cheaply around the world.
In 2017, the world received an early warning of what life might look like without 24/7 global shipping. Russia’s NotPetya cyberattack against Ukraine brought down a string of corporate giants including Denmark’s A.P. Moller Maersk, the world’s largest container-shipping company. It took the company—which operates nearly 600 cargo ships—several days of frantic information technology battles to become operational again. While it was down, its ships were immobilized.
Imagine similar disruption on a larger scale. If the Kremlin really wanted to wreak havoc on the world, it could instruct Russian sailors to not turn up for work. China could, of course, order both its vessels and crews to stay home. Or either country could spoof the GPS’s of various cargo vessels, causing them to stray into hostile countries’ waters.
Getting the Stena Impero released required lots of skilled diplomacy. Imagine the diplomatic feats that would be required to simultaneously get multiple vessels released from a string of hostile governments. As for seafarers gone AWOL, the world’s businesses and consumers would be on their own. And, Mc Garry pointed out, “the Suez Canal, the English Channel, and the Malacca Strait are all very vulnerable to disruption. If you block them, you can shut down global shipping. It’s strange a hostile actor hasn’t done that yet. They seem to be suffering from sea blindness too.”
Sea blindness is a rich man’s disease. Fortunately, it’s curable. That doesn’t mean we should all track ocean-going vessels for a hobby, but it does mean we should learn the basics of the miracle that is global logistics. “Everyone wants Amazon to deliver something tomorrow and get annoyed when there are delays,” Lockwood said. Instead of getting annoyed, consider the premise of a life based on seamless, round-the-clock travails by millions of workers aided by technology and machines that are fantastic—until there’s a minor disruption.