Why Supply Chains Are Not Just Logistics

On the morning of Tuesday 23 March 2021 the Ever Given, a container ship about 400 metres long with capacity for about 20,000 twenty-foot equivalent units (TEU), was northbound in the southern section of the Suez Canal on a voyage from Asia to Rotterdam. A sandstorm and high winds were blowing across the desert. The ship veered, ran its bow into the eastern bank and its stern towards the western one, and stuck fast diagonally across the channel. In that part of the canal there is only one lane; the parallel channel opened in 2015 covers the northern and central sections. Nothing could pass.

The ship's ownership showed how the industry is put together. It belonged to a Japanese company, Shoei Kisen Kaisha; its technical management was contracted to Bernhard Schulte Shipmanagement; and it was chartered to Evergreen Marine of Taiwan, whose name was painted on its hull and which sold the space on it, through the Ocean Alliance, to shippers who had never heard of the other two companies. Within days several hundred ships were waiting at the two ends of the canal, with reported counts at the peak of about 370 to 420. Lloyd's List estimated that the blockage was holding up about $9–10 billion of trade a day (reported). Some carriers gave up and sent ships around the Cape of Good Hope, a detour of roughly 3,000–3,500 nautical miles on an Asia–North Europe voyage. Dredgers dug sand from under the bow, the canal authority's tugs and a salvage team from Smit Salvage pulled, and on 29 March, helped by a spring tide, the ship floated free. The canal cleared its queue within days.

That was not the end of it. The Suez Canal Authority obtained an order from a court in Ismailia to detain the ship and its cargo, and claimed about $916 million for salvage, lost tolls and damage to its reputation, cutting the demand to about $550 million in May; the owner and its insurers reportedly offered about $150 million. The ship sat in the Great Bitter Lake with its 25 crew members aboard for more than three months. A settlement was announced on 4 July and signed on 7 July 2021, when the ship sailed; its terms were not disclosed, beyond a tug for the authority (reported). Meanwhile the owner had declared general average, a maritime rule centuries old under which everyone with cargo on a ship shares the cost of saving the voyage. Importers whose goods were aboard had to post security before they could have them back, paying towards an accident in which they had played no part.