Welcome to Volume 8 of Metaculus Mondays!
In this volume, we decided to tackle a Metaculus question which aligns with an extremely topic subject in global affairs today: the Suez Canal blockade crisis. We chose this question, in part, because of its timely nature and in turn its short time horizon for resolution. We also chose this question because of its massive impact on global trade and the global economy.
The canal blockade has cost nearly $10 billion per day in global trade, and with a resolution to this crisis still pending, these losses are at risk of reaching crippling heights. Given this issue’s massive geopolitical implications and its applicability to the forecasting space, the Suez Canal blockade was a no-brainer this week.
The question resolves positively once the canal is free for commercial vessels to pass through again.
Unfortunately (or fortunately!), while we were finishing up our forecast the Ever Given was freed from the sand in the Suez Canal late Sunday night on the East Coast.
This development was in many ways a shock to forecasters’ expectations. The prices on Polymarket, a forecasting trading platform, from when we started our forecast to when we finished it shows this well enough.
At the same time, there were forecasters such as Peter Hurford (a top forecaster on Metaculus) who were much bullish on the freeing of the Ever Given. Thanks to his analysis, we were able to create a much more balanced forecaster that was more heavily weighted for an early resolution, although still less than his own.
What did we do less right than Peter? A few things, we feel that we need to improve upon moving forward:
- We focused too much on why the boat might continue staying stuck rather than how the boat would get freed.
- We tried to be hard Bayesian updaters rather than what Tetlock describes as rough ones (we tried to overly formalize and model the different components of our forecast).
- Although extra forecasting precision can be useful, it is only useful if you don't lose sense of the numbers you are using. We relied too heavily on normalization and along the way lost some sense of our forecast. As you will see, the dip in probability between 30-Mar and 2-Apr was probably overly drastic and something that we missed in part due to this.
- We paid more attention to future what-ifs than to the situation on the ground. This was particularly the case with the announced move that they would unload the ship on Tuesday if it was not free by then. Instead of treating that as a negative development for an early clearing, it should have likely been the opposite given the drastic nature of such a move.
- We certainly overreacted towards shifting community forecasts on Polymarket and Metaculus.
Despite the ship being free and the question well on its way towards a positive resolution, we still feel our approach to this situation will be valuable for those looking to forecasting events such as the Suez Crisis and as a conversation starter. And in order to become better forecasters we won't shy away from publsihing analysis that post-facto we know is flawed which is why we have not changed any of our final forecasting numbers we will present.
That being said, we didn’t forecast this analysis on Metaculus. We changed our forecast as the news was first developing. We like points after all 🚀🚀🚀
We hope you enjoy the article, and reach out to let us know how you would have changed things. Without further ado, let’s get started!
What is the Suez Canal?
The Suez Canal is a man-made passage of water that connects the Mediterranean Sea to the Red Sea. Completed in 1869, the canal provides the shortest route for European countries to access the Middle East and Asia, avoiding the traditional path of circling around the bottom of Africa. The canal has become a massive thoroughfare for global trade.Roughly 12% of global trade (worth over $1 trillion a year) passes through the Suez Canal.
What happened recently?
On Tuesday March 22nd, the Taiwanese-operated Ever Given (one of the largest container ships in the world) got stuck in the Suez Canal, blocking access to the popular trade route and resulting in billions of dollars in losses. Since the ship became beached, several private company and government efforts have been arranged to get the boat back into the water. These have included pressure from tug boats, dredging of sand from beneath the vessel, and excavating the ship’s rudder which was stuck in sand.
- The only successful endeavor to date has been uncovering the ship’s rudder with many hoping that high tides can be used to re-float the boat this Monday or Tuesday.
Why does the Suez Crisis matter?
As mentioned earlier, the Suez Canal is one of the most important trade passages in the world. The waterway holds incredible economic significance as well as strategic significance from the geopolitical perspective.
- Billions are being lost each day, while geopolitical ties are also being strained.
One of the primary functions of the Suez Canal is to facilitate the transportation of oil from the Middle East, namely the Gulf states, to the West, specifically Western Europe. While many European countries have worked to wean themselves off of reliance on Middle Eastern and Russian oil supplies, they still write large annual checks for access to those country’s energy surpluses. With this blockage, agreements between the countries are at risk, potentially creating larger geopolitical rifts between the two spheres even after the Ever Given saga comes to a close.
- As a result of the blockade in the Suez Canal, oil prices were materially affected, a product of supply shortages. This shortage will likely correct itself once global trade volume is restored.
We began our forecast by taking stock of the factors we felt would have the greatest impact on the outcome of this question. We then used news articles and our own knowledge of the Suez Canal crisis to rank the factors based on their likelihood of having an impact on the crisis, and the magnitude of their impact on the crisis as well. The results were as follows:
One of the first factors that we took into consideration was the tide schedule in the Suez Canal over the next few weeks.
- Both last week and this week there have been plans made to use high tides in the canal to refloat the Ever Given.
- The prevalence of this strategy as well as its likelihood to result in a positive outcome relative to some of the other factors we considered led us to rating it as having a high likelihood of affecting the outcome of the situation, with a moderate potential impact.
We then considered foreign intervention as a potential catalyst for the Ever Given becoming un-beached.
- Given the high costs of the Suez Canal blockade on global trade, it is not unlikely that a major power, either China or the United States, would intervene and provide aid to the situation.
- The United States has a naval base on the Greek island of Crete which it could deploy in, what we calculated, would be less than a day’s travel between the island and the canal. We see the potential impact of this action being potentially high, as well as it’s likelihood should this situation progress ‘ceteris paribus’.
For reference, we examined the suite of navy ships at the United States’ disposal and determined that a ‘support ship’ would be most likely to assist on a salvaging mission.
- We then checked the speed of a support ship, which seemed to average 25 knots, or 28.8mph. Given that the ship is 518 miles from Crete, the United States support ships could reach the incident site in roughly 18 hours.
The sand dredging referenced earlier is also an important factor as it will work in tandem with the cargo removal strategy (to be discussed later on) and the tide schedule to free the Ever Given.
- The likelihood of this affecting the ship’s future is high, although due it being used alongside other tactics, it’s sole impact is likely rather low.
We also took the weather conditions over the next few weeks into consideration, as inclement weather could add constraints and delays to this process.
- The weather, albeit occasionally windy, seems stable over the next few weeks and should have a low probability of affecting the outcome or having any significant impact on the salvage mission.
One of the most prevalent strategies to dislodge the Ever Given, and the contingency plan in case the high-tide float strategy doesn’t work, is to empty the boat.
- By removing the internal cargo, the ship’s ballasts will fill with water to stabilize the ship and keep it at its current height above water.
- The plan would then be to empty those ballasts, lightening the ship even further and having it reach high enough out of the water that the tugboat force on the surface could push it off land.
- Should the load-lightening approach not work, helicopters would be enlisted to carry cargo from the ship’s surface in order to make it even lighter.
- This approach seems incredibly promising in itself, and alongside some of the other strategies mentioned, making it both a high impact and high likelihood option.
In our forecast, we considered that at port, it can take 1-3 days to fully offload a container ship.
- Given the size of the ship, and also the fact that the ship is not at port but in the middle of the Suez Canal, we put a 3x multiplier on that time frame and extended the range of time for offloading cargo to 3-9 days.
- The direct effects of this multiplier and time frame will be seen in the analysis section.
Cargo Removal Disaster
On the flip side, however, the cargo lightening does come with high risks including unbalancing the ship’s weight distribution which could lead to falling cargo or ship damage.
- While the likelihood of this is low given the high level of training of the people carrying out this mission, the impact would be high.
You can find our forecast for the Ever Given in the Suez Canal Metaculus question here: Click the next arrows to go through the Flourish story.
Here is how our forecast percentages moved over time. To understand the logic behind our decision making, we encourage you to click through the graphic above. It makes the whole progression fairly intuitive:
- We gave a 13.24% chance the ship being freed by March 30th
- We then reduced the relative likelihood between the March 31st and April 2nd
- After that, for each day between April 3rd and April 5th we give an 8.28% likelihood that the Ever Given would be freed
- We also took into account that the process from the previous step could take longer than anticipated, and factored that into our forecast
- We also tried to factor in other potential delays that could crop up (contingencies for our forecast that we baked in)
- We then assumed that if the Ever Given wasn’t free by April 13th, it would be a sign that something was really wrong with the ship, potentially severe damage. This led us to believe that things would not get better in the near-term after that date
- The lowest likelihood we forecasted occurred between April 17th and April 21st
- Finally, we gave the highest likelihood (9.52% chance) to the Ever Given being freed on April 25th or beyond