Thursday, February 03, 2011

Whither The Suez Canal In Early 2011

Unrest in Egypt makes Suez-bound shippers nervous.  Is there really cause for concern? 

The Suez Canal itself remains open to throughput traffic, but some Egyptian ports remain inaccessible due to unrest.  This could pose a short-term problem for Egyptians if any overland routes into the country are disrupted.  Transnational firms exporting from Egypt think their supply chains are secure.  They are probably very fortunate that Internet access was restored so soon.  In-transit visibility can be lost very quickly when all of your query systems are Web-based.

Oil prices continue to rise purely on fear of the unknown.  We know now that the Egyptian military has a big stake in maintaining that nation's stability, is moving to secure ports, and is probably the most powerful institution in the country (and thus most able to broker a way out of the political crisis).  Shippers are balking at changing crews in the canal but the Egyptian army's history of securing it during crises should put them more at ease. 

Concerns about disruptions of Suez Canal traffic are probably overblown.