It has the potential to create more than $40 billion dollars of trade disruption, with implications for retail and automotive sectors among others
The Evergreen container ship currently blocking the Suez Canal bound for Rotterdam from Yantian may be carrying goods worth $89m, but it has the potential to create more than $40 billion dollars of trade disruption, according to analysis by Russell.
$40 billion is the amount of goods that flow between these two ports annually, which gives some idea of the total aggregate exposure.
The analysis shows that the potential disruption of the blockage will have a significant impact for the retail sector with the Evergreen container ship carrying clothing items with an estimated value of $4m.
However, the wider potential disruption due to delayed shipments will impact technology and automotive companies such as Huawei, Airbus and Fiat Chrysler, because of their exposure to commodities such as Integrated Circuit Boards that are annually exported from Yantian port to Rotterdam.
The 220,000-tonne, 400-meter long container ship, registered in Panama, was on its way to Rotterdam from the Chinese port of Yantian.
Insurance companies and their data providers will be monitoring the grounded ship with some interest not necessarily because of any damage to the vessel but because of the nature of the cargo on board.
Commenting on the figures, Russell MD Suki Basi said: “The disruption highlights that global trade has become dependent on these ‘mega ships’ and how any disruption in trade routes can leave many organisations and their (re)insurers significantly exposed to Business Interruption risks. Coming on top of the global pandemic and recent disruptions to global auto production caused by other events, this latest blockage shows that insurers and their risk partners increasingly need to follow the money when assessing their underlying connected trade risks.”