Suez Canal may face threats from Cape of Good Hope

Although the 150-year-old waterway had a record-breaking 2018, carriers are looking for ways to cut costs.

Suez Canal may face threats from Cape of Good Hope

Although the 150-year-old waterway had a record-breaking 2018, carriers are looking for ways to cut costs.

Suez Canal may face threats from Cape of Good Hope

Although the 150-year-old waterway had a record-breaking 2018, carriers are looking for ways to cut costs.

 

   The Suez Canal Authority (SCA) has provided the shipping industry with incentives in recent years, particularly through various toll reductions for containerships and other vessels, which helped the 150-year-old waterway experience a record-breaking year in 2018.
    In terms of container vessel transits, in June 2016, the same month in which the expanded Panama Canal opened, SCA implemented discounts for container vessels transiting the Suez Canal “from ports of the East Coast of America heading to South and South East Asian ports.” In December, the SCA said those previously announced discounts would remain in effect until June 30.
    However, as carriers are embracing slow steaming and cost-cutting measures in a tough fiscal environment, many container liner services could decide to forgo the Suez Canal and transit around the Cape of Good Hope. The Port of Durban, for instance, has benefited from this alternative route and was able to increase container volumes 10 percent year-over-year in 2018.
    Services face an opportunity for cost assessment when deciding whether to take the faster, more expensive route through the Suez Canal or the slower and cheaper route around the Cape of Good Hope.

   The Bluewater Reporting Capacity Report can measure the number of container vessels transiting the Suez Canal. As of March, 587 container vessels averaging 11,064 TEUs were assigned to liner services that utilized the Suez Canal, up 11.8 percent and 0.9 percent, respectively, from two years prior, as illustrated in the chart below.
2019_4_18_Chart1.png
    The Bluewater Reporting Capacity Report also can measure the number of container vessels transiting the Cape of Good Hope. As of March, 170 vessels averaging 6,172 TEUs were assigned to liner services that transited the Cape of Good Hope, with vessel count up 19.7 percent from two years prior, despite a 4.5 percent drop in average vessel size over that time period, as illustrated in the chart below.
2019_4_18_Chart2.png
    The data suggests that lower prices in the Suez Canal induced carriers to deter large vessels from the Cape of Good Hope. Although larger vessels have been routed to the Suez Canal, smaller vessels still find the Cape of Good Hope to be a more cost-effective passage.
    This cost-effective passage has benefited South Africa, with the country’s six container shipping ports of Cape Town, Durban, East London, Ngqura, Port Elizabeth and Richards Bay collectively handling 4.9 million TEUs in 2018, a 7 percent increase from 2017, according to data from DynaLiners Weekly’s Jan. 25 newsletter. The Port of Durban is the largest in South Africa, handling 61 percent of those container volumes in 2018.
    The Port of Durban handled 2.6 million TEUs in 2016, 2.7 million TEUs in 2017 and 3 million TEUs in 2018, as illustrated in the chart below, which was built using data from the DynaLiners Weekly newsletter.
2019_4_18_Chart3.png
   In the future, if the SCA offers more price reductions for container vessel transits, smaller vessels will likely transit the Suez Canal instead of the Cape of Good Hope. If the SCA’s prices increase, larger vessels will accompany smaller vessels to transit the Cape of Good Hope.

The United States announced further plans to raise tariffs on goods from China. Who will really profit from the trade war? Data shows the EU, Mexico, Japan and Canada come out as big winners.
 

The ports of Los Angeles and Long Beach both reported the busiest Aprils in their ports history with Los Angeles handling 736,466 TEUs and Long Beach moving 628,121 TEUs.

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Suez Canal may face threats from Cape of Good Hope

Although the 150-year-old waterway had a record-breaking 2018, carriers are looking for ways to cut costs.

Apr 24, 2019 on Dec 27, 2018AmericanShipper.com

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Suez Canal may face threats from Cape of Good Hope

Although the 150-year-old waterway had a record-breaking 2018, carriers are looking for ways to cut costs.

Apr 24, 2019 on Dec 27, 2018AmericanShipper.com