Cape route to lose lustre as new Canals dig deep?

Although they are separated by nearly 12 000 kilometres of ocean there is growing competition between the Panama and Suez canals for traffic to the Americas. At the beginning of this year work started on a third competitor, the Nicaragua Canal, which is planned to be wider and almost twice as deep as the Panama Canal – even after the multi-billion dollar upgrade to the Panama Canal. Suez will face competition sooner than that, once the enlarged Panama Canal starts operating. When the new locks become operational Panama will go from a maximum vessel size of 4 400 TEUs and a draught of 12 metres to a draught of 15 metres and over 12 000 TEUs. This will reduce shipping costs for Pacific cargo bound for Atlantic ports in the Americas. Shippers will have the choice of going east from China and India to the United States and South America, or west through Suez – and vice versa. The Cape sea route will, therefore, not be the default fall-back for trade between the Americas and the East. What shipping companies will have is a greater choice of transhipment hubs for cargo travelling between the Americas and African ports. At present the fastest and preferred way to send cargo from Shanghai to New York is a combination of ship and rail, which takes between 19 and 22 days. Shipping direct through the Panama Canal will take between 25 and 26 days – not much more competitive than the Suez Canal route, which takes 27–28 days. If the Nicaragua Canal opens in five years’ time as planned this will add a new dynamic to shipping in the region as it will be able to accommodate the very latest 18 000 TEU vessels.