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.
Blocked by a mega Japanese container
ship, called Ever Given, the size of the Empire State Building, blown off course by high wind (or human error). The mother of all traffic jams is building up behind it. Perhaps 300 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.
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.
We 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.
The big ship is but a small blip.