Inflation Tarnation! Inside the Supply-Chain Snafu That Could Wreck Your Holiday Plans
As headline-grabbing catastrophes go, it was a delight. A quarter-mile-long ship, decks piled with 18,300 containers full of capitalism’s miscellaneous desiderata, skidded out of control and jammed itself sideways in the Suez Canal. Nothing tragic—no deaths, no injuries—just a fender bender that brought the estimated 15 percent of international trade to a halt. Confusion reigned as hundreds of tankers and freighters hung fire at each end of the canal, wondering what to do next.
As content, it felt extremely relatable. By the day it happened, March 23, the world had been under lockdown for a year, and we were all slowly going stir-crazy. The end was in sight—those vaccine doses were finally starting to flow—but we were still stuck. We all felt a bit like that lonely digger, scraping at the sand under the ship’s looming bow, helplessly outmatched but doing the best it could.
At the same time the mishap had kind of a snow day feel to it, the sense that the tedious obligatory course of things had been suspended for a while. For once the rich—the ship owners, the insurers, the global supply chain guys—were taking it on the chin while the rest of us ate popcorn. For seven days salvage experts flailed while economists fretted about the approximately $10 billion a day in lost trade. And then, before the episode turned boring, it was over. Working with the tides, tugboats hauled the Ever Given out of the sand and sent it on its way. Classic sitcom arc: Boat gets in a jam; boat gets out of jam; everybody learns a valuable lesson.
But as the world changed the channel, the Ever Given’s saga was just beginning. The ship was free from the sand; it wasn’t free from the 120-mile-long canal. It sailed scarcely 30 miles before Egyptian authorities ordered it to drop anchor at a widening called the Great Bitter Lake. A wrong had been committed, the Egyptians declared, and they deserved compensation. A billion dollars. So the ship was stuck all over again, this time until a payment could be negotiated.
The Ever Given floated at anchor, surrounded by desert, sweltering in the shimmering heat.
The ultralarge container vessel had first slid into the waves at the Imabari shipyard in Japan in 2018. At 1,312 feet, she ranked among the very largest cargo ships in the world: Imagine the Empire State Building lying on its side, painted green with the name of the shipping company written on the side in big white all caps, plowing the waves at the Manhattan speed limit. You could look at the Ever Given’s size as a feat of engineering, but it’s a consequence of economics. Bigger ships carry more stuff cheaper. In the Darwinian world of international trade, that means they win.
You too are a part of this—a beneficiary and participant in the complex web of world trade that underlies 21st-century material prosperity: clothes, coffee mugs, the paint on your wall, the medium in which you’re reading this—it all comes through a vast circulatory system of raw materials, fabricated parts, and assembled goods. Cargo ships are its red blood cells.
The Ever Given was loaded with some $1 billion worth of cargo, including fruits and vegetables, Lenovo computers, Ikea furniture, Nike footwear, and one full-scale replica Tyrannosaurus Rex.
The beating heart is profit. Whoever can do a better job for a better price wins. In the maritime transport business, this means that even the ships are international collaborations: Ping-ponging between the entrepôts of Europe and Asia, the Ever Given was registered in Panama, owned by the Japanese company Shoei Kisen Kaisha, operated by Taiwan’s Evergreen Group, and staffed by an all-Indian crew employed by the German company Bernhard Schulte Shipmanagement.
Its routes too were determined by exigencies of competition. To go from Asia to Europe the old-fashioned way—around the southern tip of Africa—is a 12,000-mile journey that takes 24 days. The route through the Suez Canal, dug by the French in the 1800s, cuts 3,500 miles off the journey and saves a week at sea. Even with a one-way toll of half a million dollars, it’s economically non-negotiable. Take the Suez, or lose.
In the two years after its launch, the Ever Given sailed back and forth through the Suez Canal 20 times. At dawn on the morning of March 23, it prepared to enter for the 21st. It had taken on a load in Malaysia and was headed for the Netherlands, the U.K., and Germany with some $1 billion worth of cargo, including fruits and vegetables, Lenovo computers, Ikea furniture, Nike footwear, and one full-size replica Tyrannosaurus rex destined for a Putt-Putt course in England.
Conditions that morning were daunting. A sandstorm with 40-mph winds had turned the horizon into a ruddy smudge. The Ever Given was optimized for sailing straight ahead day after day across the open ocean, where brisk winds are of little consequence. But the ship was poorly equipped for maneuvering in confined waters. Its 85-foot stack of containers effectively served as a sail, pushing the ship off course with unpredictable force and little margin for correction. The Ever Given had had control problems in the past. In February 2019, high winds had pushed it into a berthed ferry in the Elbe River in Hamburg, Germany. The Ever Given had sailed on, but the ferry was severely damaged.
The narrow confines of the Suez Canal are even trickier. Sections of it, including the stretch that the Ever Given was about to enter, are tight, shallow, and curving. The problem isn’t just that big ships aren’t optimized for these conditions; the water itself acts differently in such channels. Pressed between the bank and the advancing bow of a ship, it pushes. Sucked by the retreating stern, it pulls. A steersman trying to keep his vessel on a straight course can find himself drawn sideways. The bigger the ship, the stronger the forces. A captain’s decades of experience navigating on the open sea are useless here.
Instead, ships transiting canals rely on local experts called pilots, specialized professionals trained and certified to understand the waterway. Many have spent decades getting to know the waterway’s unique hydrology. After coming aboard, they stand on the bridge and give commands to a sailor called the helmsman, who operates the ship’s controls. The captain and at least one other officer are generally on hand and can intervene if necessary, but the pilots are functionally in charge, and it is their skill that is crucial to a successful transit.
Unfortunately, “the Suez pilots do not have a reputation for being very good,” says a retired European ship captain. “Most of the times I crossed, it was complicated.”
It’s not uncommon for ships to run aground in the Suez Canal. In the four months before Ever Given’s mishap, two other ultralarge container vessels had gotten lodged, and five months afterward a bulk carrier got stuck. All were successfully pulled off within hours, causing only minor delays. The same could not be said of the Russian oil tanker Tropic Brilliance, which got stuck for three days in 2004 and could only be moved after 25,000 metric tons of its oil were removed.
Large ships like the Ever Given are assigned two pilots, one to oversee command of the ship and another to pay attention to the surroundings. The pilots are joined aboard by an entourage that includes six mooring men, who stand ready to fasten the ship to pilings along the canal if the weather deteriorates, as well as an engineer and two electricians who attach a special 3-million candlepower spotlight called a Suez Canal projector on the bow of each ship. The idea is that the powerful light can help the crew find their way in the event of a sandstorm, but in the age of radar and GPS, it’s mainly a ritualistic expense.
A ship must provide the Suez workers with a room where they can relax while not at work, which is most of the time during the 12- to 16-hour passage. Mariners generally consider their presence a headache. “You’re trying to keep them in a controlled area so they don’t run around and steal stuff,” says American ship captain Jonathan KomLosy.
Another source of friction is the culture of petty bribery. Requests for cartons of cigarettes are so routine that the “Marlboro Canal” has become a nickname for the Suez. “The pilot would get on board the ship, and the first thing he would do is ask for a couple of cartons of cigarettes,” says Steve Cole, another American ship captain. And then the electricians, “they’re going to want a carton of cigarettes. And the tugboats, if you need tugboats, they’re going to want that carton of cigarettes. And it just goes on and on. It’s a carton of cigarettes, what’s the big deal? But it makes you question the professionalism of the pilot when the first thing he wants is a carton of cigarettes.”
Better not to complain, though. Without the pilot’s cooperation, it is impossible to pass through the canal. “You have to work with the pilot,” says KomLosy. Though a captain has the authority to overrule the pilot, pulling rank must be tactful. “I had a friend who insulted a pilot so much during a canal transit that at one point the pilot stopped and said, ‘Okay, I’m going to get off.’ My friend had to say, ‘I’m very sorry, I apologize.’ The pilot had him by the balls,” says KomLosy. “You can’t ever get to that point. If I see things start to go wrong, I’m trying to stay calm, trying to make the pilot comfortable so they’re doing their best job. Most of the time the pilot will get you through the canal in good order. But you’re gritting your teeth the whole time.”
As the sun rose higher on March 23, the Ever Given and the 19 ships at anchor nearby prepared to begin their transit. They would be traveling north together single file; once they were clear of the narrowest section, a southbound convoy could enter the channel. The Ever Given was the biggest of the northbound ships, and as such would have the least room to maneuver and be most affected by the wind. Should it go, or wait for better weather?
The decision ultimately lay in the hands of its captain, Krishnan Kanthavel, a firm-browed veteran mariner with short-cropped dark hair and a salt-and-pepper beard. Though sea captains possess near absolute authority over a ship and also bear ultimate responsibility for anything that happens to it, Kanthavel had to consider other voices, including that of the ship’s operator, Evergreen, which would face tens of thousands of dollars in costs for every day the ship was delayed. He was also subject to the wishes of the waterway’s manager, the Suez Canal Authority (SCA), whose traffic controllers can shut down traffic due to bad weather and whose pilots can order a ship to stop. Indeed, after the two pilots came aboard the Ever Given, they began to argue with their colleagues in the control center about whether the ship should be allowed to enter the canal.
In the end, the decision was made to proceed, and the Ever Given steamed toward the canal’s entrance, fifth in the line of 20 ships. According to canal rules, each vessel the size of the Ever Given must be accompanied by two tugboats, but the Ever Given was not, for reasons that remain unclear.
The Ever Given entered the thousand-foot-wide channel at 7:14 a.m. local time. To the left lay the dense urban skyline of Port Tawfiq, with its medium-rise office blocks, apartment buildings, mosques, and piers; to the right lay the endless sun-bleached dunes of the Sinai peninsula. Two miles ahead but lost in the haze was the fourth ship in the convoy, the ultralarge container vessel Cosco Shipping Galaxy, the same length and nearly the same width as Ever Given but capable of carrying slightly more containers: 21,000 versus 20,000. It was accompanied by a tug, the Mosaed 3.
As the Ever Given passed the first jetty at Port Tawfiq, it was traveling at the canal’s speed limit of eight knots, or about nine miles per hour. Though Kanthavel was formally in command, the pilot had “taken the con,” meaning he was issuing orders directly to the helmsman. He ordered the engine “full ahead.” The ship began to accelerate.
The wind was pushing from the south, nudging the ship so far to the left side of the curving channel that its hull grazed the canal’s sloping bottom. Following the pilot’s instructions, the helmsman turned the rudder so that the ship’s nose swung away from the bank, bringing it into the center of the channel. But it didn’t stay there. Like a slow-motion version of a car spinning out on black ice, the Ever Given fishtailed and veered back to the left, skimmed the left bank again, then peeled off back into the center of the channel. Kanthavel tried to intervene and wound up in an argument with the head pilot, who angrily threatened to leave the ship. Then the two pilots started arguing between themselves, with the second pilot shouting “Don’t do that!” at his superior.
By 7:30 a.m. the Ever Given had reached the end of the curving part of the channel and was starting down a long straightaway at 13.6 knots, far above the speed limit. The dense streets of the port had given way to an uninhabited landscape of sand on either side. For the next 12 miles the channel would be a straight, single lane just 330 yards wide, 110 yards shorter than the Ever Given was long. Then it would open up into the wide, 20-mile-long Great Bitter Lake, after which the canal was mostly double-laned. If the Ever Given could get through this stretch, its odds would get considerably better.
The wind was coming from behind now and no longer pushing it into the bank. But still the ship veered from one side of the channel to the other. Each time he turned the wheel, the helmsman was able to bring the ship temporarily back toward the correct heading, but too-aggressive rudder commands caused it to overshoot the mark. Instead of settling down, the ship’s swings were getting wilder.
At 7:38 a.m., as it approached the irrigated fruit-tree groves of the Al Ganayen district, the Ever Given veered toward the left bank, skimmed alongside it, then jerked hard to the right. The overcorrection was so severe that the bow swung toward the opposite bank like a harpoon. This time there was neither time nor room to undo the swerve. The bulb-shaped tip of Ever Given’s bow plunged 50 feet deep into the mud and sand of the canal bank. Maintaining its momentum, the stern swung around toward the far bank until it, too, was firmly lodged.
Kanthavel’s reaction: “Shit.”
Half a mile behind, on the bridge of the container ship Maersk Denver, marine engineer Julianne Cona aimed her camera forward and snapped an image of the Ever Given’s hull stretching from bank to bank. “From the looks of it,” she wrote on Instagram, “that ship is super stuck.”
Everyone wanted to know how it happened and who was to blame. It wasn’t merely a craving for lurid details; understanding how accidents happen is essential to making sure they don’t happen again. This is why around the world, transportation safety agencies carry out investigations and issue recommendations for rule changes. Egypt’s, unfortunately, does not have a great track record. Accidents that occur under its purview tend to be enmeshed in intrigue and controversy. More than 1,000 of the 1,400 ferry passengers on the al-Salam Boccaccio 98 died when it sank in the Red Sea in 2006. The government initially blamed the captain, but a subsequent parliamentary investigation laid the blame on the ferry’s owner, Mamdouh Ismail, a businessman and politician with close ties to then president Hosni Mubarak. Acquitted in a 2008 trial, he was later retried, convicted, and sentenced to seven years in prison, though he never served time, and the conviction was later erased.
With the Ever Given, the Egyptian government evinced no doubt as to who was responsible. Within hours, it declared, with no evidence, that the ship had run aground due to an engine failure. After it became clear that this was not true, Egypt asserted that the captain was to blame for sailing at such high speed. In response, the ship’s insurers issued a statement pointing out that when a ship is traveling through the canal in a convoy its speed “is controlled by the Suez Canal pilots and SCA vessel traffic management services.”
Nevertheless, the canal authority filed a legal claim demanding $916.5 million from the ship’s owners, citing, among other things, the cost of salvaging the boat and the damage to Egypt’s international reputation. Maritime legal experts were skeptical about the basis for this claim. “They’re obviously just sort of thinking up numbers,” said Martin Davies, head of Tulane University’s Maritime Law Center.
And Egypt’s allegations were extraordinarily vague. To understand how, exactly, things had gone so wrong, I turned to a French institution with unique insight into the issue: Port Revel, a ship-handling school 50 miles south of Lyon. Its origins date to the 1950s, when the oil company Esso (now Exxon) began to worry that its newer, larger tankers might erode the bottom of the Suez Canal. Engineers built scaled-down ships and sailed them around miniature canals to test the hydrology. Eventually, the program turned into a training facility, where ship officers and pilots could get hands-on training at the helm of 1/25-scale ships.
On a summer morning Port Revel’s director, François Mayor, took me out in a miniature tanker to demonstrate the difficulties of canal navigation. A light breeze ruffled the leaves of the birch trees along a grass-lined ditch that stood in for the Suez Canal. Although Port Revel’s ships are small, they are faithful to proportion, and the force of the morning breeze on the model’s hull was about what Ever Given encountered on its fateful day.
“A very big ship is like a sailboat,” Mayor declared. He set the boat at an angle, so that the forward thrust matched that of the wind. To compensate for an even stronger wind, he could either angle more into the wind, or go faster. But in the narrow confines of a canal, you can’t angle more. You can only go faster.
The problem is that in a canal, the faster you go, the more the propellers suck water away from the gap between the hull and the bottom of the canal. The pressure drops, reducing the effectiveness of the rudder. The controls become a sloppy mess. “When you start to think that the helmsman isn’t good, it’s time to think about your speed,” said Mayor’s colleague Bruno Mercier, a former Marseille pilot. “As soon as you see the zigzag, it would be better to slow down.”
The dynamic is implacable: To stay straight, you need to go faster, but if you go too fast, you lose control. The simple way to cut this Gordian knot, according to Mayor, are the tugboats, which can shove and pull a ship as needed to cancel the effects of the wind. This is what Mayor told Suez Canal officials they must do when they came to visit Port Revel in 2016, and this is what the rules say the Ever Given should have done.
And so it sat sweltering in the heat as March rolled into April. The crew worried. They had no idea how long they might be stuck. Another ship at anchor in the Great Bitter Lake, the Aman, had already been sitting there for four years. That ship, too, had been “arrested” due to a dispute between the ship’s owners and the Egyptian authorities. A Syrian sailor named Mohammed Aisha had been forced to spend much of that time aboard the ship alone. For a long time, the Egyptians wouldn’t even let him leave the ship, until he started swimming ashore to buy food. After that they cut him some slack and let him paddle ashore on a makeshift raft. Finally, at the end of April—almost exactly a month after Ever Given’s grounding—the Egyptians let Aisha go, and he flew home.
The Ever Given crew’s vigil was less lonely, and they were able to enjoy the same modern conveniences that they did on the open sea, like air-conditioning and internet access. They had a comfortable lounge and mess hall, and each crew member had private chambers outfitted like a hotel room, with desk, television, and refrigerator. But they were anxious. They had no idea how long they’d be forced to stay, or if Egypt might decide to press criminal charges. “It’s an endless tunnel,” says Abdulgani Serang, general secretary of the National Union of Seafarers of India, to which the crew belonged. “It takes a toll physically and mentally.”
There was absolutely nothing they could do while the negotiations dragged on. The Egyptians were holding out for an enormous sum. The $916 million was four times what the Ever Given itself was worth, and close to what the ship and its cargo were worth altogether. Shoei Kisen, the owners, countered with an offer of $150 million. But Egypt held all the cards. The ship was in its jurisdiction, and the longer the haggling dragged on, the less the cargo was worth. Produce began to spoil; holiday decorations missed their sell-by date. “Quite a lot of this cargo is going to be effectively useless,” says Davies, the Tulane professor.
Eventually, Egypt knocked its price down to $550 million. After three months, the parties reached an agreement. Shoei Kisen agreed to pay an undisclosed amount and pledged that it would remain a “regular and loyal customer of the Suez Canal.” The Ever Given pulled up its anchor on July 7 and sailed north to Port Said, at the northern end of the canal, where divers inspected its hull for structural damage. Given the all clear, the Ever Given finally set out to sea a week later, bound for Rotterdam.
For the Indian crew, their release was a relief. For others in the maritime industry, the feeling was exasperation. The SCA had run a ship aground, then forced the ship’s owner and insurers to pay an enormous fee for the mistake. Here was an important coda to the iron law of free-market competition: If you can seize a monopoly, you can extract wealth without accountability.
For the shipping companies that use the canal, there isn’t the comfort of knowing that steps will be taken to prevent a repeat. As stipulated under international law, Panama is conducting an investigation, with results likely to be released next year. But given Egypt’s record with past investigations, it’s unlikely it will brook any criticism of the canal authority, let alone take steps to address shortcomings there. So it shouldn’t come as a great surprise if the exact same kind of grounding happens again, along with the attendant brouhaha. The fundamental problem is that the people who are entrusted with the safe passage of the ships bear no actual responsibility. “No matter how badly the pilot screws up,” says KomLosy, “it’s still the captain that’s responsible. It’s kind of unfair, but that’s the way it is.”
And that’s the way it has been for a long time, which is why many people doubt that the Ever Given’s travails will impact demand for the waterway. “I don’t think it’s going to stop people from using the canal,” says Davies.
Then again, if accidents like Ever Given’s keep occurring, things may shift. While ships traveling between Asia and Europe will always have a strong incentive to take the shortcut through the Suez, those on other routes have more flexibility and might rethink their options. “If ships are starting to have accidents because of pilots, the calculus could change for some ships,” says one industry insider. “That would give Egypt a motivation to change.”
After crossing the Mediterranean and turning north, the Ever Given reached its port of call, Rotterdam, on July 29, 129 days after its grounding. Containers unloaded, it sailed on to Felixstowe, England, where the rest of the cargo found its way off for dispatch to its ultimate destinations. Then the Ever Given headed back out to sea, bound for a repair yard in China. Its route was never really in question. It went through the Suez Canal.
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Published at Thu, 18 Nov 2021 13:00:00 +0000