Stranded ship in Suez Canal keeps Chattanooga logistics firms busy

Staff Photo by Matt Hamilton / CEO Jason Provonsha talks during a meeting at Steam Logistics on Friday, March 26, 2021.

The immense container ship that jammed up both the Suez Canal and billions in global trade was stuck about 6,500 miles away from Chattanooga, but some local firms were on the front lines of the fallout.

"We post canal and waterway delays and closures, and when we posted that closure people were like, 'What? The Suez Canal is closed?'" said Corey Ranslem, the CEO and co-founder of International Maritime Security Associates.

The company's intelligence and development center is in Chattanooga, where reliable high-speed internet, low business costs and relatively stable weather all make it easier to support maritime clients.

The unprecedented closure of the Suez Canal will likely take weeks to clear, even after the ship was freed Monday from the sandy bank of the canal where it has been stranded since Tuesday, Ranslem said.

"At last count, I think there were 300 or 350 boats that were waiting on both sides of the canal to get through," he said.

Once the ships are moving again, the complexities of this trade backlog are just beginning, he added. The containers have to travel by truck or by rail once they're on land, and the effects of the stranded ship will have implications across the logistics landscape, Ranslem said.

photo In this photo released by Suez Canal Authority, the Ever Given, a Panama-flagged cargo ship, is pulled by one of the Suez Canal tugboats, in the Suez Canal, Egypt, Monday, March 29, 2021. Engineers on Monday "partially refloated " the colossal container ship that continues to block traffic through the Suez Canal, authorities said, without providing further details about when the vessel would be set free. (Suez Canal Authority via AP)

"It'll be interesting as we watch over the next couple of months how all of this comes together," he said. "It's conjecture at this point, but as we look six to eight months out, we'll have a better idea of the logistical economics."

The stranding of the ship Ever Given came at the end of an extremely busy and strange year for the international freight and logistics business, said Jason Provonsha, the CEO of Steam Logistics, an international freight brokerage based in Chattanooga.

"This was by far the craziest year we've ever seen," he said. Steam has about 1,500 clients and grew 200% in 2020, but the growth came with some pain as global trade struggled to stabilize in the wake of pandemic disruptions, he said.

"We had to really emphasize putting our customers first," Provonsha said. "We were a constant bad-news deliverer: Your rates are going up, we can't get you space on that ship."

The stranding of the Panama-flagged, Japanese-owned ship created "the perfect storm when you look at the global supply chain," Ranslem said. "This kind of exacerbated the issues we already have."

Adam Shearer, chief financial officer for Steam, said the logistics industry recovers relatively slowly from big disruptions, including those unleashed a year ago with the onset of the COVID-19 pandemic.

"The consequences will be felt for months," Shearer said. "We're still recovering from an inventory standpoint from something that happened a year ago."

Those challenges are made worse by a "just-in-time" approach to fulfilling consumer demand, Ranslem said.

"People relying on the Suez Canal could see two- or three-week, even a month, delay in receiving goods that come through that part of the world," he said.

The good news for the U.S. is that most of the goods consumed here come from Asia, and come into the country at ports on the West Coast, he added.

"This will have a bigger effect on Europe," he said.

The colossal traffic jam held up about $9 billion a day in global trade, and cast a spotlight on the vital trade route that carries over 10% of global trade, including 7% of the world's oil.

Over 19,000 ships ferrying Chinese-made consumer goods and millions of barrels of oil and liquefied natural gas flow through the artery from the Middle East and Asia to Europe and North America, according to the Associated Press.

Contact Mary Fortune at [email protected]. Follow her on Twitter at @maryfortune.