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Will Suez Canal Blockage Hit Smartphones?

by Neil Mawston | Mar 25, 2021

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.

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