Suez could be more Profitable than Panama Canal for Post Panamax Container ships

Suez Canal

Panama Canal

Due to the tripling of the fee for transiting the Panama Canal, post Panamax ships are chosing to take the route through the Suez Canal from Asia to the US East Coast.

The president of Maersk Line, Sobren Skou, stated that his company decided to restructure its service between Asia and the United States east coast through the Suez Canal, which can take ships with 9,000 TEU’s (20 foot containers), in comparison to a máximum of 4,500 TEU’s for the Panama Canal.  The last ship from Asia to the US east coast through the Panama Canal will transit on April 7 and the first service through the Suez Canal will be a week later. “It is much more economical to use the Suez Canal,” said Skou. “One of the reasons that this is occuring is that the cost of using the Panama Canal has increased. It all comes down to costs,” he explained.  In June, Maersk will receive an 18,000 TEU ship, which will be the largest container ship in the world to enter into service.

According to the Suez Canal authority, the number of container ships passing the Suez dropped 12% to 6,332 in 2012 of a total of 17,225 ships passing through the Canal. By comparison the  number of container ships transiting the Panama Canal in 2012 was 3,331 of a total of 14,544 transits through the Canal, according to the Panama Canal Authority’s website.

The distance between China, with its large manufacturing base, to the US east coast is 4% to 5% longer through the Suez Canal than through the Panama Canal, said Skou. For example. the distance from Hong Kong to Charleston, South Carolina, is about 12,000 miles through the Suez Canal and about 11,000 through the Panama Canal.  From Singapore the distance is shorter through the Suez than through Panama.

The rates applied to ships crossing the Panama Canal have triplicated in the last five years to $450,000 per transit for a ship with 4,500 containers, said Skou.  It is not only the Panama Canal that will be affected by this change of route by Maersk, but also the Balboa and Manzanillo ports that receive the ships from the Maersk Line. Some consider that this change of route by the world’s largest container shipping line will be only temporary until the expansión of the Panama Canal is completed and enters into operation in 2015.

By: Michell De La Ossa Prieto for Capital Financiero

(Article in Spanish)