Suez Canal Blockage and the Cement Industry

In June 2021, freight rates soared to new heights amidst global shipping disruptions, notably exacerbated by the blockage of the Suez Canal. The incident involving the Ever Given, a massive container vessel, drew widespread attention as it stalled traffic through one of the world’s busiest waterways. The repercussions were felt across various industries, including cement and clinker shipping, where delays and congestion added complexities to an already strained global supply chain.

The Suez Canal blockage created a bottleneck for 40 bulk carriers, some of which were transporting cement. With 369 ships queued on either side of the canal at its peak, the economic impact was significant, with estimates ranging from US$6 to 10 billion per day on the global economy. The Suez Canal Authority reported losses of US$14-15 million per day during the obstruction, underscoring the canal’s vital role in global trade.

Sharan, speaking at Global CemTrans, highlighted the vulnerability of cement and clinker shipping during such disruptions. The shift towards larger vessels like handymax-sized carriers has become evident, reflecting trends in the industry to optimize transportation efficiency and capacity. Despite initial concerns over potential delays affecting cement shipments, the aftermath of the Ever Given incident saw congestion dissipate relatively quickly, minimizing long-term impacts on global supply chains.

Before the onset of the COVID-19 pandemic, cement and clinker shipping dynamics were evolving, with clinker shipments surpassing cement in 2019. Key importers included the US, the Philippines, and Singapore for cement, and China, Bangladesh, and the Philippines for clinker. Turkey and Vietnam emerged as major exporters, highlighting global trade patterns that were disrupted by subsequent pandemic-related market shifts.

The incident underscored the strategic importance of the Suez Canal for global commodity trade, despite ongoing challenges in Egypt’s domestic cement sector, such as production overcapacity. Local producers have faced profitability challenges while observing frequent transit of cement carriers through the canal, prompting strategic considerations for export initiatives.

One notable move was made by Al-Arish Cement Company, which recently initiated its first export of clinker via the Clipper Isadora to Ivory Coast from East Port Said port. Future shipments are planned to West Africa, Canada, the US, and Europe, showcasing Egypt’s role in global cement trade routes. Although the Clipper Isadora did not traverse the Suez Canal on this occasion, the route highlights Egypt’s strategic maritime access and its role in facilitating global cement exports.

In conclusion, while the Suez Canal incident posed immediate challenges to global shipping, including cement and clinker transport, the resilience of supply chains and strategic responses from industry players underscore the ongoing importance of efficient logistics planning and global trade routes in mitigating disruptions and ensuring continued market stability. As the industry navigates future challenges and opportunities, maintaining flexibility and adaptability in logistics strategies will remain critical in sustaining growth and resilience.