Four reasons why the closure of the Suez Canal may affect your pocket

Known as the backbone of world trade, the Suez Canal is one of the main sea crossings in the world. With this, 12 percent of the world's total merchandise passes.In such a situation, after the cargo ship going from China to the Netherlands got stuck on Tuesday morning, it is expected to have a serious impact on the business of the world.

Four reasons why the closure of the Suez Canal may affect your pocket

Why is the Suez Canal so important?

An important link to unite east and west

The Suez Canal is a 193 km long canal located in Egypt that connects the Mediterranean Sea to the Red Sea. It is the shortest sea link between Asia and Europe. This waterway crosses the Suez Isthmus (Strait) in Egypt. This canal consists of three natural lakes.

The importance of this canal, active since 1869, is that ships going to the eastern and western part of the world before it went to the southern tip of Africa via the Cape of Good Hope. But after the construction of this waterway, ships began to sail through this part of West Asia to Europe and Asia.

According to the World Maritime Transport Council, after this canal is built, a ship connecting Asia and Europe has to travel a distance of nine thousand kilometers. This is 43 percent of the total distance.

daily value of 9.5 billion

According to an estimate, 120 million tonnes of goods are transported every year from 19 thousand ships from the Suez Canal. The Lloyds List believes that $ 9.5 billion worth of freight ships pass through this canal every day. Of these, about five billion dollars go to the west and $ 4.5 billion to the east.

) Very important for supply chain:

All the ships are full, then within two days a total of 110 thousand TEU cargo which will be going from Asia to Europe will be trapped in terms of 55 thousand TEUs (capacity measuring unit of container). . And as soon as the jam is over, all these ships will arrive at European ports simultaneously, so that the load there will also reach the peak.

There's coming  a lot of pressure on European ports.  due to this problem, the supply and price of every goods sold in shops is likely to be affected.

Risk of rising inflation

With the closure of the canal, cargo ships and oil tankers are not able to deliver food, fuel and finished goods to Europe. Due to this, no goods are being sent from Europe to the Far East.ING Bank believes that if this blockage is prolonged then it is more likely that buyers will have to turn to the cash market to secure the supply of oil from elsewhere.The containers will also have to decide whether to wait for it to be emptied or go through the 'Cape of Good Hope'. According to the bank, if you choose either of the two options, the freight will be delayed.In the opinion of experts, the real effect of the existing problem will be revealed only with time.