PS PAGE

The Suez Canal is in the news as major shipping lines such as Maersk, CMA-CGM and China Shipping Container Lines (CSCL) have taken the decision to miss out the Canal on select eastbound services from Europe to the Far East and instead route vessels around the Cape of Good Hope. Maersk was the first line to take this action announcing that through January/February it would re-route seven eastbound AE7 sailings around the Cape. CMA-CGM and CSCL quickly followed suit and over January/February/March will send their joint FAL2/AEX7 service eastbound service via the Cape – eight sailings in all.

According to PR News Service, the cost of sending one Maersk PS class vessel via the Suez Canal is a phenomenal $850,000-$870,000 per transit. Eight of these vessels, which each have a nominal capacity of 11,000 teu, operate on Maersk’s Asia Europe 7 (AE7) service. Clearly, therefore, in these difficult times there is a big incentive to take the Cape option on the less heavily utilised eastbound run from Europe to the Far East. Furthermore, by combining this routing with slow steaming the extra journey time comes out as seven days thereby allowing vessels to retain their regular port call slots.

The loser in all this is, of course, the Suez Canal and it will be interesting to see if a response is forthcoming from it, but with lines saving around $1m per voyage it is difficult to envisage that the Suez Canal authorities will be able to compete with this. Equally interesting is the issue of whether such a strategy will continue to prevail beyond the current slack season, ie the end of March.

The Panama Canal is another main waterway artery use of which entails significant costs and this subject, together with diverse other critical aspects associated with the Panama Canal, is one that comes under major scrutiny in an interesting new publication from Dynamar, Past, Present and Future, Panama Canal Container Trades (December 2008). Costs are examined in-depth in a section of this comprehensive report entitled, Panama Canal-Related Costs and in another main section Competing with the Panama Canal (www.dynamar.com).

Interestingly, in the context of competing with the Canal, Dynamar notes that shipping lines such as APL, CMA-CGM, Coscon, Maersk Line and MOL are now established customers of the Panama Canal Railway Company which runs services between ports on the Atlantic and Pacific coasts of Panama. It further notes that volumes are increasing although the railway is basically only a real competitor in the context of small volumes; where high volumes are concerned the Panama Canal wins every time.

Dynamar also notes that the Panama Canal actually competes with the Suez Canal for the Far East – North America trade – the latter route being the preferred one for containers originating from or destined to South East Asia (the shorter route). Based on a 4300 teu vessel with a length overall of 264 metres, Dynamar estimates that the cost of a round trip through the Panama Canal, all in, is $605,000 compared with $385,000 for the Suez Canal.

The Suez Canal option, therefore, in this context is a strong one.