- The Suez Canal blockage is adding to a host of supply-chain issues.
- The freighter, which is slightly larger than the Empire State Building, could take weeks to move.
- The logjam could affect the availability of numerous imports, including toilet paper and coffee.
- See more stories on Insider’s business page.
The Suez Canal jam could cause shortages of toilet paper, coffee, furniture, and other imported goods.
Depending on how long it takes to move a hulking 224,000-ton freighter called the Ever Given – said to be bigger than the Empire State Building – that ran aground on Tuesday, shoppers could see a shortage of numerous items.
It will affect “basically anything you see in the stores,” Lars Jensen, an independent container-shipping expert based in Denmark, told NBC News.
About 12% of global trade moves through the Suez Canal, the Egyptian waterway that connects Europe and Asia. The Ever Given, one of the largest vessels in the canal, has been blocking hundreds of cargo ships from passing through.
Even before the blockage, businesses were struggling with supply shortages because of the coronavirus pandemic. Nike, Costco, Toyota, Honda, and Samsung have recently said supply-chain issues are harming business this quarter and would likely have an impact going forward.
The Suez Canal logjam has added a layer to the delays and shortages. Experts have said that the blockage is costing about $US400 ($525) million an hour and that the stuck vessel could take weeks to move. Some ships will take an alternate route around Africa, adding 24,140km and about two weeks to their journey.
Shoppers could face another toilet-paper shortage
One of the biggest producers of the pulp used to create toilet paper, Suzano SA, told Bloomberg that the Suez Canal jam would likely delay wood-pulp shipments and, as a result, the availability of toilet paper in stores.
Walter Schalka, the CEO of Suzano, which is responsible for about one-third of the pulp used to make toilet paper globally, told Bloomberg that competition for shipping containers would likely push Suzano’s shipments back at least a month.
Some people have taken to stockpiling toilet paper and household goods because of the coronavirus pandemic. They could soon be facing a similar situation as they were a year ago when toilet-paper availability was at a premium.
Toilet-paper prices may also go up as port delays even outside the Suez Canal increase the price of shipping overseas.
Coffee supplies could be depleted because of the logjam in the waterway
The Suez Canal jam is also blocking shipping containers full of the type of coffee used in Nescafe instant coffee, Bloomberg reported.
A coffee shortage would likely be felt more keenly in Europe but could reverberate worldwide, as the waterway is blocking key shipments between Vietnam and Europe, Bloomberg reported.
The blockage could soon affect coffee availability in stores and cafes, especially considering that coffee companies have been feeling the pinch of shipping-container shortages for the past few months, the report said.
“Can roasters support two to three weeks of delays? Probably not,” Raphaelle Hemmerlin, the head of logistics at the Swiss coffee trader Sucafina SA, told Bloomberg. “I don’t think they have the buffer stock that they normally have.”
Customers have already reported delays in furniture deliveries
The work-from-home lifestyle necessitated by the pandemic has helped the home-improvement and furniture industries boom.
But customers are already seeing furniture-delivery dates delayed for several months. During a third-quarter earnings call in February, La-Z-Boy executives said customers should expect delivery dates that are five to nine months out from the purchase date.
The delay in availability has been made worse by congestion at ports, especially in Southern California, a key drop-off for containers from Asia. The Suez blockage isn’t likely to help.
Dan Flickinger, the CEO of Kasala, a furniture chain in Seattle, told The Washington Post earlier in March that orders placed this month weren’t expected to arrive at his store until December.
“A lot of our furniture is handmade and requires a tremendous amount of components, so one missing piece can really mess up a whole lot of production,” Flickinger told The Post.
Gas prices could continue to skyrocket
Oil shipments going through the Suez Canal account for about 5% to 10% of global shipments, David Fyfe, the chief economist at Argus Media, told NBC News.
Experts say the logjam couldn’t have come at a worse time
Jon Monroe, a maritime-trade-and-logistics consultant, told CNBC that the blockage would affect the arrival of US imports and manufacturing components because of a container shortage.
“Before the Suez Canal disruption, we were expecting the container situation to get worse in April because we were already seeing the scarcity of containers,” Monroe said. “This canal closure will not help. You will start to see product piling up on factory floors.”
Brian Bourke, the chief growth officer of Seko Logistics, told CNBC that the blockage would squeeze retailers struggling to restock.
“The timing of this could not be worse,” he said. “You have stimulus checks going into the hands of consumers. After every stimulus check, we have seen a huge surge in product volume. We are talking to businesses that are running out of inventory. How can you have a stimulus if you can’t buy anything? Your wait for your couch can be longer than three months.”
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