Subscribe to our free, weekly email newsletter!


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 Patrick Burnson, Executive Editor
February 16, 2011

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.

http://www.alphaliner.com

About the Author

image
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 .(JavaScript must be enabled to view this email address).


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!

Recent Entries

The saga continues, as the PMA and ILWU plan to resume their contract negotiations on Monday, August 4, in San Francisco

Carload volumes were up 7.6 percent at 299,256, topping the week ending January 12 at 290,607 and the week ending July 5 at 270,731.

U.S. companies made only marginal improvements in their ability to collect from customers and pay suppliers in 2013, while showing no improvement in how well they managed inventory, according to the 16th annual working capital survey from REL a division of the Hackett Group, Inc.

Study suggests solutions for filling the talent gap, including the development of robust ties with the education system.

The Department of Transportation’s Bureau of Transportation Statistics (BTS) reported this week that U.S. trade with its North America Free Trade Agreement (NAFTA) partners Canada and Mexico increased 5.4 percent from May 2013 to May 2014 at $103.9 billion.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA