Morgan Stanley
  • Now, What's Next? Podcast
  • Nov 3, 2021

Stuck on the Ever Given

Transcript

Sonari Narration: The winds in Egypt were strong on the morning of March 23rd, 2021.

Sonari Narration: Sand and dust blew in from the Sahara, turning the sky yellow, making it hard to see the Suez Canal. ..Where 10 BILLION dollars worth of trade flows between Asia and Europe every day.

Sonari Narration: Getting through the narrow waterway is not easy. I want you to imagine pushing the Empire State Building on its side… for 120 miles. The winds press against the cargo containers like they're sails, enough to push a huge ship off its course. When that happens, it's hard to regain control.

But, you know what, this is NOT a story about what happened on a March morning when a cargo ship called the Ever Given got stuck in the Suez Canal. It's also not a story about who or what was to blame, about the billions of dollars of goods that got  blocked, or about the legal battles that followed.

Sonari Narration: It's a story about us.

About how we're all connected to a vast complex network of wants and needs, supplies and demands, creation and destruction., a network we rely on every day, a network that’s more fragile than we realized.

Sonari Narration: I’m Sonari Glinton, and this season on Now What's Next ...an original podcast from Morgan Stanley... we're bringing you the stories behind the global network called the supply chain,... stories about how our stuff gets to our front doors and why that matters, about current problems and future solutions, and why even those fixes can push us to keep innovating.

Most of the time, we don't give much thought to this network and how it works or - too often these days - doesn't... But when a ship with more than 18- thousand containers on it gets stuck in the Suez Canal... for 6-days in March ...well, we couldn't look away.

Jan Unander: on board the ever given ship. We had, one container, a 20 foot container, that consisted of 6,000 sets of wires

Sonari Narration: That's Jan Unander (Yawn oo-NAN-durr) . He's a Swedish business man who gets products made in and shipped from China to customers in Sweden. One of his customers makes computer systems for trucking companies. And they need the wires that Jan had aboard the Ever Given to make these systems work.

Jan was expecting the container in early April at the ship's first port of call in Rotterdam. It takes about a month to get there from China on a normal trip during normal times. But this time...

Jan Unander: it took four months and nine days

Sonari Narration: We’re talking four nail-biting months and nine days. But the drama for Jan started weeks before the Ever Given got to the Suez Canal.

Jan Unander: a week before we were supposed to, get the goods on board, the ship, the broker started to warn us that it was quite tricky to find a place on board a ship at all. It was a question over a shortage of containers

Sonari Narration: The container shortage. Have you noticed it? Think about it, it's one of the reasons why you're seeing out of stock signs, and you get notices for long shipping delays.

It's not that there's not enough containers. They’re just not in the right places.  In areas that import a lot of stuff- like let’s say Los Angeles - you have containers piling up in the ports, or waiting on ships in the harbour to be unloaded. If you export a lot - like , say in China - you’re running low on containers. And that’s just one of the issues slowing things down... and jacking up prices. The cost of container shipping by sea has gone up by as much as 10 times the amount it was two years ago. Lucky for Jan, his broker had friends who booked cargo space on ships.

Jan Unander: he came back with an email saying that he found a space on the ship called ever given, and we were very happy at that time.

Sonari Narration: Well, that joy didn't last. But when Jan saw the images of the ship stuck in the canal 17 days after it left China, he was of two minds - sure, he had a lot of money in goods aboard the Ever Given, but he's also a marine engineer and worked in the merchant navy in the 60s and 70s. He knows cargo ships - and he knows canals. He knows how tricky they can be.

Jan Unander:  I 'm sure that the crew would prefer to go around South Africa, instead of going through the canal. I heard, one captain that said I prefer to do colos--. What do you call it? Coloscopy instead of taking a ship through the canal, it's risky. I wasn't worried because my background said that this is going to be solved in quite short time. And I guesstimated three days or something, but, um, it took longer.

Sonari Narration: A little longer... It took 6 days before the Ever Given was freed from the canal. Then it was held for inspection and investigation. Two weeks later, the canal authorities seized the ship, demanding more than 9 hundred million dollars in compensation from its owners. The Ever Given ended up sitting there for over three months while the authorities and the shipping company figured out a deal.

Jan Unander: Uh, started to become, uh, not furious, but, quite upset I realized my customer didn't have much, extra capacity in their store so if this would be a long story, we could be in trouble, both the customer and we.

Sonari Narration: It's important to realize that Jan's company pays for most the production and shipping costs in China up front. He only gets paid when the customer gets their stuff. As the customer's supply dwindled, Jan sped up production in China and found a way to get more wires to his customer before it was too late -- by air. It also meant that Jan's company had to spend more money up front, before they'd been paid for that last batch.

Jan Unander: we could have, actually, been forced to file for bankruptcy. It will be very close. so of course we couldn't pay salaries, but that, that's another story.

Sonari Narration: Jan's rushed shipment - by air - made it just before his customer ran out of supply. But it was close. And he's already seeing a lasting impact from the Ever Given delay.

Jan Unander: it will have consequences because, the customer, they are now hesitating to produce everything in China, which means that, our business is at risk now.

Sonari Narration: That’s not all because of a ship getting stuck in the Suez Canal. Manufacturing in China ain't what it used to be. As wages and education rise, and the Chinese middle class grows, so do the costs of manufacturing. And China is moving toward producing more higher-end and high-tech goods.

Jan has thought about other ways of getting his goods from China to Sweden - without going through the Suez Canal. There’s a train route - but that’s more expensive and crowded… And then there's another shipping route that runs from China through the seas north of Russia.

Jan Unander: I think it's about two weeks less. So it's quite a quick route. And that is something that, if we have the opportunity or to do that next time, it's safer, you got the icebergs, but I prefer those instead of the canal authorities.

Sonari Narration: That’s saying something. But that route through the arctic is controversial. Some shipping companies have begun to exploit the shorter winters and lengthening summers, while others are refusing because of environmental concerns. As we'll see more and more in this episode and series, supply chain solutions don't always work well for everyone.

Despite it all, Jan still thinks shipping by sea is the best way to go.

 Jan Unander: I would say the only way to go, I talked to the customer the other day and we are planning for the next delivery. . And so we will fill another container hopefully in the end of this year. And then we do it again. That's life.

Sonari Narration: That may be life for now but things are changing all along the supply chain. Sustainability, automation, new technologies, human rights - these factors are all shaping where this global network is headed next - factors we'll be exploring more through this season.

 As for where the Ever Given was headed ... after eventually unloading most of its 18-thousand-plus containers, including Jan's, in Rotterdam in late July, it sailed on.. for less than a week ... across the mouth of the North Sea to its final unloading point... Felixstowe Port in Suffolk, England…

Jake/Port: On one side of me is the sea uh, so you get a lot of sea smell down here. Uh, the British, British weather,

Sonari Glinton: And that's where we meet Jake Slinn...

Jake/Port: there's a huge ship, at the moment is docked, five or six cranes working, unloading it, while panning round. thousands and thousands of containers stacked up, um, all different colors, sizes, shipping companies. Uh, yeah. It's, it's amazing.

Sonari Narration: Felixstowe is the biggest port in England. Over 50% of the country's goods arriving on 3,000 ships dock there over the course of a year, including the Ever Given.

Jake/Port: So the ever given, was, was docked right in front of me. Um, this is sort of the main dock of where most of the ships come into Felixestowe. And this is where a lot of people came down to, to view it when it came in

Sonari Narration: With dozens of ship enthusiasts watching, the Ever Given unloaded 2 thousand containers at this port in early August... and some of them were destined for Jake. He's got a pretty unique job on the supply chain. When he heard about the Ever Given delay…

Jake Slinn INVU: what went through my mind was, you know, slight excitement, of course, uh, lots of, uh, fresh fruit and veggies that were on this, on the ship. Um, we're, we're going to need to be destroyed

Sonari Narration: That's right. Destroyed.

Jake Slinn INVU: I own and run a company called JS global cargo and freight disposal. Uh, we specialize in disposal of container goods coming from outside the UK

Sonari Narration: Jake cut his teeth in the waste business.

Jake Slinn INVU: I've always been in the waste and recycling industry. Uh, since I was young, again, I'm still quite young. I'm only 22. My dad has been in it since he was a, he was a boy as well. So I've learned everything from him.

Sonari Narration: Now Jake saw a gap in the market -- a lot of goods arrive at Felixestowe but can't make it out of the port for a variety of reasons. His company destroys what’s not allowed into the country…like goods that don't meet safety standards, or foods that have passed their best before date. Jake also buys up stock that’s safe but has been left behind … like if a company goes under. He started his business three years ago... and there has not been a dull day since.

Jake Slinn INVU: It's a bit like, storage wars. The TV program, you never know what you're going to be going to be opening in the container. It's always something different every day.

Sonari Narration: As for the Ever Given cargo that reached Felixstowe... more than four months after it was due to arrive? Let's just say, not all of it made it there... intact.

Jake Slinn INVU: So we're currently dealing with, uh, around 10 to 15 containers of red cabbages.

Sonari Narration: Take a moment to let that sink in. That's 25 tons of red cabbage in each container

Jake Slinn INVU: they were kept at a certain temperature that they weren't leaking out of the containing or any juices or anything like that um, but yeah, the smell, was disgusting as you can imagine. So, we needed to act quickly to get this containers off the port into, into a disposal site. And, you know, as soon as possible.

Sonari Narration: So what’s a boy to do with 25 tons of rotten cabbage?

Jake Slinn INVU: all of our food waste goes into, an anaerobic digestion site. Um, sounds complicated, but it's, it's actually not, food waste gets turned into electricity, so it's, it's going into a good home, and we’re not putting it into the ground or anything like that.

Sonari Narration: Soon after the Ever Given got stuck, Jake started getting calls from business owners with goods aboard the ship and other ships that got delayed. They were looking for alternate ways to unload their stock if their containers didn't arrive by the time they needed them. And the calls were not just about food.

Jake Slinn INVU: People were panicking. Definitely. If you're a company waiting on, on, you know, 20,000 items of stock that you still haven't got and you need them for a certain time, then you're going to be panicking. Um, so we were getting calls from people who had, uh, televisions on board, uh, hot tubs, onboard, people sort of looking at other, other avenues instead of, uh, waiting for the goods .

Sonari Narration: Remember, Jake's company buys up stock that's still safe for the UK market, and destroys what isn't. And with over 200 hundred other ships in a traffic jam behind the Ever Given… that was a lot of business for Jake.

Jake Slinn INVU: These ships had a lot of fresh fruit and veggie on, ,so we were destroying, bananas, pineapples, oranges, you name it. We were destroying it.

Sonari Narration: The Ever Given delay may have been an isolated event, but once again, it points to bigger issues. Jake says supply chain problems account for a huge percent of his business.

Jake Slinn INVU: I would say eight times out of 10 it's a reason or an issue, or a fault with either shipping line or the customer or the container itself with the fruit. Um, as I mentioned, any of these are in the refrigeration containers, if they go wrong, which happens a lot. They're not safe for the UK.

Sonari Narration: There can be problems all along the shipping route, but also on ground as well. There’s a shortage of truck drivers....that’s something we’ll talk about later in season…and it’s causing major delays everywhere

Jake Slinn INVU: it's a bit like the Suez canal. It's it's just holding up people collecting their containers off the dock. Um, there's not enough container drivers out there. There's not enough lorries out there too. With the volumes that are coming in from these ports at the moment.

Sonari Narration: Waste is a part of the supply chain, and the delays along each link, since the start of the pandemic, have increased the volume of it...

Jake Slinn INVU: and the Ever Given just slowed everything up. It just slowed the whole shipping world up. Everyone sort of took a step back and realized, you know, how, how big this problem is.

Sonari Narration: It's a problem that for now, is going to keep bringing Jake back to the ports...

Jake/Port: And every time I come down, down to a port in the UK, especially Felixstowe because of the size of it, it never sleeps it, you know, there's always something going on. Um, and that's what Ilike about the shipping world it just never sleeps.

Sonari Narration: At any  time...day or night... thousands of cargo ships are crossing the world's seas, moving wires, cabbage, toys, you name it... around the globe. Lights blinking in the darkness, nothing but ocean in every direction. The shipping world never sleeps.

Sonari Narration: The 24/7 hour nature of the shipping world is something Julian Wong understands in a way most of us don't even think about. And it was on his mind when he saw the crowds watching the Ever Given pull in to Felixstowe in August.

Julian Wong: I have to say that when they see all these crowds, it saddens me in a way that all the interest is a size of the ship and what has happened to it. It got stuck in the Suez canal and nobody ever gives a thought of, uh, 24 people on board.

Sonari Narration: Those 24 people operating the massive Ever Given?.. They’re all Julian thought about when he visited the ship in August - one of the few outsiders to board the infamous vessel.

Julian Wong: They are to me are the unsung heroes. I make it a mission of mine to to try and make them visible to the general public.

Sonari Narration: Julian was permitted on the Ever Given because he's a Stella Maris Port Chaplain.  Stella Maris - latin for Star of the Sea - is a Catholic organization that helps seafarers in need. Julian is in touch with crews all over the world, and visits the port all the time... climbing up tall ladders to check on crew members... despite a debilitating fear of heights.

Julian Wong: when I take the first step of a gangway, I start counting 1, 2, 3, I don't look over the side.

Sonari Narration: Julian didn't hear directly from crew members that were stuck in Egypt on the Ever given and suspects it has to do with signal problems in the Suez Canal. They were replaced by a new crew while the ship was held by the canal authorities. That's the crew that Julian visited in August.

Julian Wong: I wanted to, to show them my appreciation. And there was why I just took three boxes of a Ferrero Rocher chocolates for the crew. And, uh, and just a simple thank you card.

Sonari Glinton: Why chocolate?

Julian Wong: The one thing that seafarers always us surprisingly, uh, chocolates it seemed to be universal there and they do love, Ferrerro Rocher

Sonari Glinton: a little bit of joy that is universal.

Julian Wong: Yeah.

Sonari Glinton: And when you, when you got on board and you got two or three boxes for Ferrero Rocher chocolates, how did the people respond to you on that ship?

Julian Wong: They were obviously very, very pleased. Appreciate it. You know that I call on them. And, uh, apparently for about three or four days also the only person that they went on board

Sonari Narration: Let's be real for a moment, when we buy stuff online most of us aren't thinking too much about how it will get to us - let alone who's going to help get it there. Seafarers often get stuck on ships - sometimes for incredibly long periods - during government disputes, weather delays, route changes and lately, pandemic lockdowns. As global trade increases and we rely more and more on shipping, we're also relying on these people who are vulnerable to forces way out of their control. Julian tries to make their lives a little easier.

Julian Wong: I'm there to listen to them, help them in any way I can, if they want shopping to be done it, then I'll do that for them because they haven't got time at the go ashore.

Sonari Glinton: It's about making connection.

Julian Wong: yeah, it's basically being their friend and, I always tell them if you ever need help with anything, wherever you are, anytime, anywhere, just send me a message and I'll do all I can to help you

Sonari Glinton: How many seafarers do you come in contact with or are you keeping in touch with, um, at any given time

Julian Wong: try and befriend at least one seafarer on each vessel I visit I will say I have a few hundred on my messenger contacts

Sonari Narration: With hundreds of contacts on social media, Julian wakes up every morning to dozens of messages, and tries to help in any way he can.

I asked Julian to help me understand who's working on these ships.

Julian Wong: They come from Indonesia, the Philippines, India. Basically the poorer parts of the world because it's cheaper to hire them. And they work as seafarers because they need a job to support their families and extended families. I have to say.

Sonari Narration: A usual contract keeps a crew member onboard for three quarters of the year... which means you miss a lot..

Julian Wong: your children growing up, you don't see them. The first day of school, you don't see them on their birthday. Apart from on the, your little, mobile phone screen.

Sonari Narration: And the pandemic has made this hard job harder. Crew members are often barred from getting off the ship when it docks, and lockdowns have made it impossible for some to find ways back to their families for months at a time.

Julian Wong: But then you also realize that they have to deal with it because otherwise they, there won't be a job for them.

Sonari Glinton: What were you doing before you were a chaplain?

Julian Wong: I was a psychiatric nurse 45 years.

Sonari Glinton: Wow. As a psychiatric nurse, what are those sorts of mental issues that you have to, that, that you noticed, or you have to deal with when people are on these ships with that amount of time?

Julian Wong: yeah. The rate of depression is quite high. The rate of suicide as well is quite high. ,

Sonari Glinton: You've said that that a ship can be like a floating prison.

Julian Wong: Yeah. They're always working 24 7. And if you get on with each other fine, but if you, if you have problems with a certain member of the crew or certain officer, you're stuck with a person for nine months, 11 months or more,

Sonari Narration: a big part of what we're doing this season is looking at problems along the supply chain and who's doing what to solve them. But some of these solutions can have unintended consequences. And this is something Julian thinks about a lot. For example, as shipping technology becomes more advanced, more automated, there's talk of reducing the number of crew members aboard a ship ....which not only means fewer jobs...

Julian Wong: I just dread to think how would they cope

Sonari Glinton: if the ships are getting bigger and the crews are getting smaller, what does that mean for the physical and mental state of the people who are doing this work?

Julian Wong: Yeah. it will get worse. obviously there's less human, interaction, so mentally. Emotionally, down fiscally, you know, it's going affect them.

Sonari Glinton: tell me if I'm wrong but I I Would say that, you know, the larger world looked at this vessel getting stuck and what happened as a logistics problem as a supply chain problem. And you seem to think of it as a human problem.

Julian Wong: It is a human problem because without human beings, those vessels wouldn't move.. I mean, it's as simple as that. Compassion has come into it . I think they have to take the human element into account without that I think is going to be a tragedy.

Sonari Narration:

The Ever Given ship delay put a spotlight on a fragile system in need ...not just of a makeover... but a big overhaul.

As we'll see this season, there are more than a few ways forward. Heck, there are innovative, compassionate and unexpected routes. Those routes are being forged by thoughtful, out-of-the-container thinkers who are making new connections all across this network

 On the next episode, we find out how the Just-In-Time supply chain model meant we didn't get the pandemic PPE we needed ...and how we could be better prepared the next time...

I'm Sonari Glinton. Thanks for listening to Now What's Next, an original podcast from Morgan Stanley.

In March 2021, the Ever Given cargo ship got stuck in the Suez Canal and opened the world's eyes to the vulnerability of a system we rely on each and every day. Sonari Glinton kicks off a season-long series on the supply chain by exploring how different people were impacted by the event.

In this episode we meet Jan Unander, a Swedish importer who had goods aboard the Ever Given and almost lost his business because of the delays. Jake Slinn, the owner of JS Global Cargo and Freight Disposal, takes us to the Port of Felixstowe to illuminate how much cargo went to waste as a result of the Ever Given stoppage, and the traffic jam of ships stuck behind it. Finally, we meet Port Chaplain Julian Wong, who visited the Ever Given when it docked in Felixstowe and deeply understands the stressful lives of the people who work on cargo ships.