One canal is contributing to 12% of global trade flows. Globalisation is usually referred to in abstract terms, linked systems, integrated supply chains and free trade. But it functions on something far more physical: a 193km watercourse cutting through the Egyptian desert, and the countless ships passing through it every day. This article would go over what the Suez Canal is, the importance of it in global trade and commerce, and the importance of the incident in 2021.

Established back in 1869, cuts through northeastern Egypt, more specifically the Sinai Peninsula, and connects the Mediterranean to the Red Sea. It allows ships coming from Europe to Asia and vice versa, instead of going around Africa(Cape of Good Hope), to reduce their route by ~7000km. Being one of the most significant developments in the 19th century in terms of engineering, economic and geopolitical constructions. Constructed by France and Egypt, the process took 10 years; for most of the canal’s early times was controlled by Britain and France. It was later nationalised in 1956, due to its profitability, generating a record $10.3 billion in revenue for Egypt in 2023. Not only that, but it creates tens of thousands of jobs for the citizens of Egypt. The Suez Canal Economic Zone, a special industrial area surrounding the canal, is responsible for over 100,000 jobs with a target of 1 million in 2030.

Most of the international trade is routed through water. The rapid, vast globalization with the extensive progress in containerisation and innovation in ships. This allowed the Suez Canal to prosper in importance and usage. A crucial step in modern free trade. 19,000 ships per year, carrying more than $1 trillion in goods annually. The shorter routes allow lower fuel expenditures, time and crew costs-allowing cheaper prices on goods for consumers, which is especially pertinent to this example, as most value-added goods are manufactured in China; this channel allows for the export of large numbers of goods to Europe. It also helps to transport commodities like oil, gas, electronics and grain, allowing the backbone of global supply chains to get around the world a lot quicker. This allows for intensifying the efficiency and how commonly just-in-time manufacturing is used, as it depends on predictability and the speed of shipping.

In March 2021, Ever Given, a 400m container ship, got stuck and blocked the channel for 6 days, which caused a significant disruption to global trade flows and a widespread issue for the whole world, with an estimated ~$9.6 billion in goods held up for each and up to 450 ships stranded. This caused a spiral effect across numerous industries worldwide, especially more crucial and major ones like oil, auto and retail. As most of the vessels obstructed from going through were bulk carriers and crude oil tankers.
One ship. One canal. Global chaos.

In conclusion, the Suez Canal is more than a waterway - it's a key for most global trade in the modern world. It shows us how extensively interconnected modern trade has become, and how fragile that interdependency can be. One misdirected ship in 2021 didn't just block a canal; it wasn’t just a shipping incident; it revealed the vulnerability rooted in a system built for efficiency over anything else.

Sources:
https://www.euronews.com/
https://www.britannica.com/
https://www.stlouisfed.org/
https://www.imf.org/en/blogs