When the super large container ship which some describe as a behemoth got stuck in the Suez Canal, I took a close look at everything I owned and where they were made. Except for the dry goods in my pantry and the frozen meat and meals in my fridge, all my clothes, including shoes and boots, kitchen wares and utensils, home furnishings, bedroom furnishings, even my car parts came from somewhere else. Let’s not forget my electronic gadgets which were assembled in China and Korea. Here I am, a proud Canadian but not owning anything Canadian except my driver’s licence and passport.
Globalization took a different meaning since the 80s. It used to be that rich countries manufactured their products using poorer countries’ raw goods. The finished products would then be resold to other countries which needed them. Enter container shipping which made it possible to move raw goods to other countries at a lower cost with managers overseeing the flow of these goods from their headquarters resulting in the redistribution of industry.
Redistribution of industry entails lower wages and economies of scale. By shipping raw goods to a poorer country, the richer country can minimize its wage expense. At the same time, factories serving the entire world can specialize in making a specific product in volumes, thus lowering the cost of said product.
Super large container ships like the Ever Given can carry as much cargo as 12,000 trucks. And can get stuck in a narrow passage as the Suez Canal or even the Panama Canal, as was the case last March 23rd. It took almost a week to dislodge this ship, with 350 ships waiting in line to pass through and causing a costly delay. The dislodging of Ever Given may cost the Japanese shipowner somewhere between US$25 million and US$50 million, the final amount negotiated by both Boskalis, the dredging company, and the shipowner.
Outsourcing is the 21st-century practice of hiring a company outside of one’s country to do services or manufacture goods – tasks are traditionally done by the hiring company – to minimize labour costs, mainly. It basically has to do with long-distance trade but has been less reliable and slower than two decades ago. Take for example the Ever Given ship. Because of its heavy cargo, loading and unloading in ports may put it behind schedule, often resulting in late deliveries. At the end of the day, outsourcing may not always be a bargain.
The Suez Canal blockage affected Canada, specifically the port of Montreal where goods from Asia account for 25% of the port’s commerce. Imports from Asia include clothing, electronics, and construction material. Exports, on the other hand, include grain, pulp, paper and forestry products. The impact of the delay caused by the blockage will be felt in the coming weeks as ships stalled in the Mediterranean and Red Seas start to move after the Ever Given was dredged.
Memes about the Suez Canal and Ever Given surfaced after the ship floated and continued its journey. I admit, seeing some of these memes made me chuckle. Seriously, though, this recent Suez Canal incident will not stop shipowners from building big container ships if the demand for more products like electronics which I see as a “must-own” does not go down. And I don’t see it going down right now, what with companies like Apple and Samsung outgunning each other on the release of their respective latest models. I for one am guilty of owning more than one gadget. Right now, I have a mini iPad, an iPad Air, a Samsung Android, and an HP laptop – all given as gifts. I didn’t buy any of these and I could’ve refused them when they were handed to me. But I didn’t. After all, who says no to a gift of an electronic gadget.
