Subscribe to our free, weekly email newsletter!



Keeping watch on the Suez

Supply chain managers in Europe responsible for ensuring the smooth flow of goods after a catastrophic failure will be watching the escalating civil violence in Egypt closely
By Patrick Burnson, Executive Editor
March 27, 2013

As shippers continue to track the deteriorating political situation in Egypt, analysts are assessing the possible impact on Suez Canal services.

Recent civil riots in Port Said were, “arguably,” too close for comfort for those dependent on the Suez Canal, said Drewry’s Container Research – a London-based industry think tank. Although the arterial trade route is unlikely to close, the possibility cannot be ignored, analysts added.

According to Drewry’s calculations, there is enough spare vessel capacity to absorb most of the shock of sailing from the Far East to Europe via the Cape of Good Hope simply by increasing vessel speeds, which means that closure of the Suez Canal tomorrow would not be a monumental crisis.

Supply chain managers in Europe responsible for ensuring the smooth flow of goods after a catastrophic failure will be watching the escalating civil violence in Egypt closely, nevertheless.

To help put the importance of the Suez Canal into perspective, its two-way trade between the Far East and Europe accounted for approximately 20.1 million twenty-foot equivalent units (TEUs) last year, compared to 5.2 million TEUs between the Indian Subcontinent/Middle East and Europe, and 688,000 TEUs between Australasia/Oceania and Europe.

In the unlikely event of the gateway closing, businesses in Europe dependent on goods from Asia, Australasia, the Indian Subcontinent, and Middle East would immediately be thrown into turmoil, said Drewry.

Forcing each of the 24 weekly Asia-North Europe services to sail around the Cape instead of through the Suez Canal in both directions would trigger a fall in productivity of up to 17% (12 ships being necessary to provide the same capacity per week as 10 ships today, if the speed remained the same).

To continue providing the same capacity per week with a weekly frequency, carriers would collectively have to inject 48 additional ships into the Asia-North Europe services, or increase the speed of their ships, or a combination of both.

More on the Suez tomorrow.

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

Congested U.S. port terminals, harbor and over-the-road truck and driver shortages, slower trains and longer rail terminal dwell times due to increased domestic rates have not only disrupted service but also driven intermodal rates and cargo handling costs up sharply.

Southern California shippers are getting a break on container dwell expenses for the next ten days as the Port of Long Beach announced that it had added an extra three days to the time that overseas import containers can remain on the docks without charge.

The long-simmering court battle over whether FedEx Ground’s workers are independent contractors or employees appears headed to the appellate courts—and maybe the U.S. Supreme Court.

Carload volume headed up 4.3 percent to 298,376, and intermodal units, at 273,376 containers and trailers were up 4.8 percent annually.

In light on various service-related freight railroad service issues, the Department of Transportation’s Surface Transportation Board (STB) recently announced it is now requiring Class I railroads to publicly file weekly data reports on service performance. These weekly reports are slated to begin on October 22.

Article Topics

Blogs · Ocean Freight · Ocean Cargo · Trade · All topics

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