Today, Explained - Ship happens

Episode Date: March 29, 2021

After six days, a very big boat is finally afloat. While stuck, it brought international trade through the Suez Canal to a halt and cost companies billions of dollars. Transcript at vox.com/todayexplained. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Visit connectsontario.ca. In the beginning, there was the Ever Given, a 1,300-foot, 200,000-ton shipping vessel owned by Evergreen. To keep things confusing, Evergreen is Taiwanese, the ship is Japanese, and it flies a Panamanian flag. Some 18,000 containers embarked from the Yantian district of China, headed for the Rotterdam, Netherlands. But then the Ever Given met high winds and sandstorms. In the Suez Canal, the ship ran aground.

On the first day, the world couldn't quite believe the Suez Canal was blocked. This is not the view you want when navigating the Suez Canal. A giant container ship wedged from bank to bank blocking one of the world's most important shipping lanes. The fastest route from Asia to Europe and on to North America easily blocked by a ship nearly 200 feet wide.

It's unclear how Evergreen's container ship became stuck. Tugboat spent most of Tuesday trying to move it. Tankers carrying Russian, Saudi and American oil are now waiting on both ends of the waterway, which connects Europe to Asia. Observers looked up the ship's course and realized sometime before it got stuck, it had roamed around the waters in the shape of a dill-shnick. Have you guys heard about this big ship that drew a penis using its GPS and then crashed into the Suez Canal?

This is a real thing, and this is what we're talking about today. Have a quick look at this this is the ship that crashed this is the penis that it drew white by driving in the ocean and this is the article that we're reading dick ship latest still stuck in the sewers canal god you can't make this up can you you really cannot make this up wow what a johnson That's a big Johnson. An irreverent turn for a very serious story. The online monitoring system Tanker Tracker shows the huge backlog it's created. A traffic jam, basically, with ships unable to pass in either direction.

On the second day, more tugboats. A fleet of tugboats has been trying to refloat the megaship ever since, while a digger, tiny by comparison, tries to extricate her bow from the eastern bank. The tugboats were smaller in size and failed to free the ship after countless tries. Tugboats and cranes have failed to free the ship, which ran aground on Tuesday during a sandstorm. At least 150 other vessels are now blocked from transiting the canal. The ever-given, still stuck in the Suez Canal, has at heavy, nowhere going anywhere. And this extends all the way out to the Red Sea. Red Sea, more like red brake lights for the, as far as the eye can see. Now your alternates as we zoom in out here. Dozens upon dozens of vessels find themselves stuck in

the Red Sea and at the mouth of the Mediterranean. Aboard them, laptops and crop tops and sneakers and teepee, toy cars and real cars and jet fuel and livestock, brown paper packages tied up with strings. These are a few of my favorite things. Concerns mount over the impact on international trade. Not surprisingly, the economic consequences are mounting. About 12% of global trade passes through the Suez Canal, and each day of backlog, more than $9 billion worth of goods is stuck. And that translates to about $400 million an hour. But wait, there's hope. Word that the ship had been moved and was once again aligned with the waterway.

Alas, no. No such luck on the third day. Egypt suspends all traffic in the Suez Canal. It is around this time the idling vessels begin to lose faith and seek alternative passage around the Cape of Good Hope, but on the fourth day they brought in the dredgers, the mighty Dutch dredgers. Diggers, tugboats, dredgers and a crack team of Dutchmen known as the Special Forces of Salvage Operations have been drafted in to help. Tugboats and dredgers have been operating here around the clock to try and dislodge this giant ship that has been blocking the Suez Canal for the past few days. We understand that huge amounts of sand have been removed to make room for the ship to move. And the Dutch dredgers say it could take up to weeks to get the boat unstuck. By the fifth day, there are serious considerations to lighten the ship's weight by removing cargo. And I'm all like, why didn't we think of that on the first day?

They're going to have to bring in floating cranes, which don't exist here in Egypt at the moment and remove the cargo. There are 18,300 containers, according to the chairman of the Suez Canal Authority, and to take enough of those off to lighten the load so it can finally move could take quite some time. But wait, new hope. Never mind the tugboats, the excavators, the Dutch dredgers, or the lightning of the load. By Jove, maybe the moon will bail us out. Breaking news on that massive cargo ship stuck in the Suez, finally been set free moments ago, and she is on the move, and she is massive. Massive! Egyptian authorities say the bow of the skyscraper-sized Ever Given was wrenched by tugboats from the Canal Sandy Bank, where it's been stuck since last Tuesday. It's now back in its normal position in the middle of the waterway. This brings to an end a crisis that has been blocking traffic along one of the world's

busiest shipping routes. On the sixth day, today, aided by the moon, the tides, and the swift relocation of 30,000 cubic meters of sand, the Ever Given, brought to you by Evergreen, is freed. The horns sounded off in celebration. The Suez Canal was finally, once again, open. On the seventh day, we can only hope the sons of Egypt will rest. We are one! We are one! Support for today explained comes from Ramp. Ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket. Ramp says they give finance teams unprecedented control and insight into company spend. With Ramp, you're able to issue cards to every employee with limits and restrictions

and automate expense reporting so you can stop wasting time at the end of every month. And now you can get $250 when you join Ramp. You can go to ramp.com slash explained, ramp.com. Ramp.com. Cards issued by Sutton Bank. Member FDIC. Terms and conditions apply. BetMGM, authorized gaming partner of the NBA, has your back all season long. From tip-off to the final buzzer, you're always taken care of with a sportsbook born in Vegas. That's a feeling you can only get with BetMGM. And no matter your team, your favorite player, or your style,

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If you have any questions or concerns about your gambling or someone close to you, please contact Connex Ontario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGaming Ontario. Okay, so the boat's afloat again. It's great for international trade, but what did we learn along the way? We reached out to Shirat Ganapethi to find out. He teaches economics at Georgetown University and said we should start with the Suez Canal itself. The Suez Canal is one of those great colonial projects. Connecting the Mediterranean with the Red Sea,

the Suez Canal, in the safeguard of British troops, is vital to Western security. Through its waters, our ships can race to danger points, east or west, to guard Egypt as well as the Western nations. What essentially it was serving to do was connect India and the Far East colonies with the French and the British mainland. Now, for the longest time, this project was managed by the British and the French. They had their own authority. of the Anglo-Egyptian Treaty of Alliance to participate in the successful conclusion

of the efforts of the last 16 years to reach a satisfactory solution of the problems inherent in Anglo-Egyptian relations. But eventually, in the mid-20th centuries, the Egyptians decided it did not make sense. They had their own independent country. And they decided, for good reason, that the canal was

on their land. And so they nationalized it. The Suez Canal, never far from the news in its 87 years of history, hits the headlines like a bombshell. When, without a hint of warning, Egypt's premier, Colonel Nasser, announces that his country is taking it over. It precipitated quite a bit of warning, Egypt's premier, Colonel Nasser, announces that his country is taking it over.

It precipitated quite a bit of consternation in Europe, you know, at the loss of empire, because a lot of this happened at the same era as decolonization. And so the authority of the canal passed from the British and French administrators and transferred it to their own Suez Canal authority. This was a turbulent period for the canal. Keen observers of Middle Eastern history know there were many wars fought, some involving Egypt. And the canal was actually shut down multiple times between 1967 and 1975. At one point, the canal was actually mined just to prevent crossings between the Egyptian army and the Israeli army.

And so for a relatively long period, the canal was kind of a war zone. So there are great clips of, you know, Egyptian tanks and Israeli tanks crossing the canal in the Yom Kippur War, the Six Days Conflict. But eventually, things calmed down, relationships between Israel and Egypt normalized, and we enter kind of a new age of globalization. And so this new age of globalization meant that the canal became more and more important as Asia and Europe started trading more and more.

And the real jump came with kind of the expansion of China from a kind of a relatively closed economy to a free market economy. And when this happened, many European firms saw both China as a place to source materials, but also to sell materials. And so what we get are more and more ships every year going from China to Europe, but also the other way around. And the star of the show here is exactly that, an absolutely massive unit traveling back and forth from China to Europe. Which industries are hardest hit when a ship like this gets stuck? So the secret is pretty much every industry is hit. And that's the nature of the global economy

today. We've got these massive value chains where almost every industry is reliant on transportation between countries. Now, if you look in raw numbers, the industry that uses this route the most in dollar terms is the petrochemical industry. But if you look in kind of like economic effect, kind of when goods come back and forth, in dollar value,

the computer and electronic manufacturing industry is also going to be really, really hit. So if you look at any electronic device that you have, for example, an iPhone or even a computer, some components will be made in Europe. Some components will be made in Asia. Some components will be made in America. And these goods will crisscross the globe multiple times before being made into the final good, before coming back to a final location. And so you have this back and forth process happening multiple times over the global value chain, which is why these shipping links are so important. Because without this, you know, it'll take months and months because you have to add one week every time you ship it back and forth. And when you ship

something back and forth three or four times, you're adding another month or two onto the overall process. A disruption like this is rare, but could the Suez Canal, could the global shipping industry have been more prepared for it? Yes and no. So the global shipping industry is undergoing quite a few changes right now. China is very, very aware that its trade routes by sea from China to Europe are relatively fragile. And there's really two things that are happening that are trying to, you know, make the world shipping network more resilient. The first is increases in overland trade. So China has a policy of the Belt and Road Initiative. And one component of the Belt and Road Initiative are new train land routes going directly from China to parts of Europe. It'll make it both easier and faster

for Chinese manufacturers and European manufacturers to ship to each other across a land route. And so these are relatively new routes. Most of these routes have only opened up in the last couple of years, but they're rapidly gaining more and more acceptance. There's a second thing that's going on. It's a little more pessimistic in terms of the world itself, and that is global warming. Global warming is melting Arctic sea ice. And as Arctic sea ice melts, we're going to get a new trade route from Asia to Europe. And instead of going through the Suez Canal, ships will be able to pass through the Arctic sea directly from ports in Asia, especially northern Asia, directly to ports such as Hamburg and Le Havre and Rotterdam. And by bypassing kind of a lot of, I would say, relatively hot spots in Asia, as well as in the Middle East, you're going to get a more direct

trade route from Asia to Europe. Right now, that route is not fully in use. There's still some sea ice. But I'm willing to bet if we don't do anything about global warming, in a few years, we're going to see regular trade routes completely bypass the Suez Canal and go through the north, through the Arctic Sea, directly from, for example, Tokyo to Hamburg. So the amount of consumption we're doing is going to make it easier to do even more consumption. Yes. We are in a weird loop. By destroying the environment, we're going to make it easy to consume more.

And destroy the environment even more. Are we skipping a few steps as we head in that direction? Should we be taking a moment to examine our consumerism more, or is this just inevitable? I mean, I'm not a philosopher, so there's a big philosophical debate out there, right? Everyone loves the fact that you get next-day delivery, everything in the world has been set up literally to get consumers, not just in America, but in Europe, in India, whatever they want in their doorstep in a matter of hours. But there is kind of a lot underpinning that entire system. We've got these massive ships, we've got these canals. We've got producers in every

country around the world working nonstop to get this every day to you and me. Your Amazon Prime shipment? Well, in two hours, you and I can kind of order groceries at your door. But where are those groceries from? Well, that shrimp may have been frozen in Vietnam three months ago, put on to one of these massive ships in some sort of container, crossed the Pacific Ocean, been unloaded, put onto a different train, shipped across the country, offloaded from the crane, put into a warehouse, shipped to your local kind of cold storage facility, then shipped to your local grocery store, and then finally been put onto a Postmates bag and onto your front door. Now, it might seem like it came to your house in an hour,

but there were months and months of preparation, logistics, billions and billions of dollars of ships, port infrastructure, cool storage facilities, refrigerated trucks, and just technology underpinning kind of you and I have a whim. And it seems like everything's working, but there's a lot in the background. And all that in the background is going to be inherently risky. There's very little that you can do to kind of take out all the risk. And so we're struggling. I think as a society, we really don't know what to do because as consumers, this is unambiguously a great, well, for me, it's a great thing that I can get frozen food delivered to my doorstep in two hours with me just pressing a button. But there are all sorts of kind of risks and costs throughout the global economy that we're grappling with on a daily basis.

And that's why when I want shrimp, I just go to the grocery store and buy a box of Cinnamon Toast Crunch. You do you. That was Shirat Gunapethi, Assistant Professor of International Economics at Georgetown University. I'm Sean Ramos-Verm. This is Today Explained. A reminder, we are working on a future episode of the show for all the people who are hesitant

about getting the vaccine, not the anti-vaxxers, but people who have concerns, whatever they may be, about all these new shots. Maybe you're pregnant, maybe you're sick, maybe you're scared of needles. Whatever the case, we want to hear from you and we want to address your questions and concerns with the science in an upcoming episode. Give us a call and leave us a message at 202-688-5944. Just tell us your name, where you're calling from, and what your vaccine question is. The number again is 202-688-5944.

We might use your voicemail in an upcoming episode. You can also email us todayexplained at vox.com. Thanks. Thank you.