The Disruption Report #7: Plastic Prices Spike, More Containers Overboard, and the Suez Canal is Unplugged

Plastic Prices Near Record Highs

In The Disruption Report #6, I wrote that Texas’s deep freeze was having an impact on petroleum prices and, therefore, the cost of plastics. Texas-based refiners were forced to shut down production due to electricity blackouts caused by uncommonly low temperatures in the Long Star state.

According to a Bloomberg article by Kevin Crowley, “Plastic Prices Hit Record High to Stoke Inflation Concerns,” plastics prices are not going away any time soon. The article states:

Prices of polypropylene, used for packaging consumer goods, are at record levels and more than double the 2019-2020 average, according to ICIS. The cost of high density polyethylene, used for shampoo bottles and grocery bags, is at the highest since 2008.

“Today we don’t have enough volume to even meet the needs of the domestic customers” never mind exports, said Bob Patel, chief executive officer of chemicals giant LyondellBasell Industries NV, referring to polyethylene. “I think we’ll be well into the fourth quarter before we see conditions back to normal.”

That Ship Stuck in the Suez Canal Has Been Freed

The ship’s name is the “Ever Given”, and it has finally been floated and thereby unblocked the Suez Canal. A combination of pushing, towing, and high-tide did the trick. Never-the-less, it is going to be a while before the resulting backlog of ships has been cleared.

The back-up in the Suez Canal doesn’t just impact shipping in the Mediterranean but worldwide. One of the options for those unwilling or unable to clear the canal is to sail around Africa. The problem with that is the pirates who are active off the coast of East Africa.

Container ships transport 90% of the world’s cargo. The Ever Given is one of the new super-sized containers that are so big (more than 4 football fields in length) that they can hold up to 18,000 forty-foot containers. In fact, the Ever Given was so long that it touched both banks of the canal when it turned sideways.

(To learn more about container shipping click here.)

More Containers Topple Overboard

No one is quite sure why but the number of containers toppling overboard is increasing. Speculation is that it may be due to the rise in demand due to the pandemic.

Here is how an article in Big Think puts it:

The ONE Apus incident was one of at least six major container ship accidents that occurred since November, which altogether have resulted in the loss of 2,980 containers. That’s more than double the annual average number of lost containers from 2008 to 2019, according to a recent report from the World Shipping Council.

The world shipbuilding companies are constructing a bevy of new, super-sized container ships called New Panamax and Ultra Large. Based upon what happened in the Suez Canal and the incidents of containers falling overboard, someone may want to take another look at the notion of bigger is better.

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