Business as usual in the Suez…for now

Analysts note that the Suez is a vital cargo thoroughfare for goods transiting from Asia to Europe, North America and Western Africa. Egypt’s Red Sea and Mediterranean ports are growing in regional significance.

By ·

As news reports continue to track the transit of two Iranian warships through the Suez Canal, global shippers may also be ready to rethink their supply chain strategies.

“So far, we have yet to learn of any disruption in the Canal,” said Anne Marie Kappel ?Vice President ?World Shipping Council in Washington. “Container vessel operators continue to deploy shipments and it’s business as usual.”

According to Kappel, the Egyptian government has the authority to permit the warships to complete their journey to Syria, and Council constituents have not voice their concern over Israeli interference…yet.
“Obviously, everyone is monitoring the situation, but we don’t see any immediate reaction among shipping companies.”

Last week, however, A.P. Moller-Maersk closed its Suez container terminal for two days and DP World suspended operations near Cairo as mass protests continued to rock Egypt’s capital. Furthermore, Hanjin Shipping began re-routing vessels last week from Port Said and Alexandria.

Analysts note that the Suez is a vital cargo thoroughfare for goods transiting from Asia to Europe, North America and Western Africa. Egypt’s Red Sea and Mediterranean ports are growing in regional significance.

Even before Israel raised the threat of an armed reaction to the news, analysts told LM that a potential closure of the Suez caused by civil unrest in Egypt would have a serious impact on container shipping.

Although a closure of the Suez canal is improbable, the risk of a disruption of vessel traffic in the canal cannot be totally excluded, said Alphaliner, a Paris-based consultancy.

This would have a huge impact on container shipping which represents the largest vessel segment currently transiting the canal, analysts added.

Containerships currently account for 55 percent of the net tonnage and for 38 percent of the total number of vessels transiting the Suez Canal. The high tonnage share of the containership transit is due to the larger size of container vessels that pass the canal compared to other vessel types.

Currently there are at least 56 affected containership strings. By far the majority of these are weekly services. Out of the total, 46 strings concern Far East-Europe services. In other words, about seven or eight containerships transit the canal every day in each direction.

Should the situation worsen, the most obvious alternative would be to re-route ships via the Cape of Good Hope. This would mean a much longer journey and such a decision might be weighed against the prospects of seeing the canal reopen soon.

Alphaliner noted that the distance between Singapore and Rotterdam, for example, stands at 11,800 nautical miles via Cape of Good Hope against 8,300 nautical miles via the Suez.

Analysts also that additional seven days of 20 knots steaming (one way) and a much higher fuel bill, would be the likely consequence for shippers.

www.alphaliner.com


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Latest Whitepaper
eBook: Why Multi-Tier Supplier Collaboration is More Important Now
Explore the benefits of supplier collaboration including sharing demand forecasts, faster reactions to demand or capacity changes and well-coordinated product launches.
Download Today!
From the September 2017 Logistics Management Magazine Issue
While Amazon’s recent bid to purchase Whole Foods made mainstream headlines, the e-commerce giant will still need to adhere to time-tested realities. Any way you slice it, the integrated U.S. cold chain requires optimized service from existing ports, 3PLs, cold storage warehousing, transportation providers and high-value vendors.
Improving 3PL Management: Glanbia Adds Muscle to Logistics
Why Retail Supply Chain Transformations Fail - and how to get it right
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
EDITORS' PICKS
26th Annual Study of Logistics and Transportation Trends: Transportation at Digital Speed
While a majority of companies strongly agree that transportation is a strategically important...
34th Annual Quest for Quality Awards: Winners Revealed
Which carriers, third-party logistics providers, and North American ports have crossed the service...

2017 Salary Survey: Fresh Voices Express Optimism
Our “33rd Annual Salary Survey” reflects more diversity entering the logistics management...
LM Exclusive: Major Modes Join E-commerce Mix
While last mile carriers receive much of the attention, the traditional modal heavyweights are in...