Will Suez Canal Blockage Hit Smartphones?

The canal, which separates Africa from the Middle East and Asia, is one of the busiest trade routes in the world, with about 12% of total global trade moving through it

The Suez Canal, in Egypt, is a 200km shortcut from Asia to Europe. It connects the Red to the Med. Some 10-30% of the world‘s trade, oil, and ocean-containers flow thru it. One of the planet’s most vital commerce routes… And it’s blocked. suez canal blockage

Blocked by a mega Japanese container ship, called Ever Given, blown off course by high winds. The mother of all traffic jams is building up behind it. Perhaps 200 ships unable to pass thru since it first got wedged in the canal on Tues, 23rd of March.

This comes after a year of coronavirus, which has already caused havoc among supply chains for smartphone handsets and components. Tablets, laptops, TVs and cars are also affected.

According to Lloyd’s List tracking data there are more than 160 vessels waiting at either end of the canal. These include 41 bulk carriers and 24 crude tankers.

Along with oil, the sea traffic is largely consumer products such as clothing, furniture, manufacturing components and car parts.

Will the Suez blockage cause more supply pain for smartphones in Q2 2021?

At this stage, we think the answer is: yes, but not much.

Startegy Analytics estimate less than 5% of global smartphone logistics flow thru the Suez Canal today. Most smartphone handsets and components are transported internationally by other ocean routes or by airplane. For example, a Boeing 747 can fly 150k smartphones from factory to warehouse in hours.

If there is going to be an impact, it may come indirectly from volatile oil prices, which have oscillated up and down like a yoyo. Fuel inputs, for delivery trucks or factory generators, could add a tiny bit more price inflation to the already inflationary environment for smartphones. We may also see European or Asian shippers stop using container ships and switch to airplanes, creating a temporary squabble for cargo space. That Boeing 747 freight plane from Amsterdam or Hong Kong in April might be a touch more expensive.

Overall, though, for now, the global smartphone impact looks low to moderate. suez canal blockage


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