‘Extra Suez Canal capacity a long-term game’ - Drewry

Are the forecasts for the new US$8.5 billion Suez Canal project, officially launched in Egypt over the weekend, realistic or are the demand projections more of a long-term game?

Drewry Maritime Research noted in its Container Insight report this week that given the prospect of much slower growth in international trade following the end of the China export boom of the last 15 years, compounded by changes in energy policy away from oil, the Egyptian Government should not expect the additional capacity of the canal to fill up quickly. “It must be a long-term game,” said Drewry.

The Suez Canal Authority (SCA) estimates that 8% of the world’s maritime traffic passes through its canal and believes that more will come now that a second passage has been added. It expects the New Suez Canal will help to nearly double the average number of vessels transiting per day from 49 to 97 and more than double the revenue to US$13.2 billion within 10 years.

However, Drewry has commented that it cannot see how the ambitious short-term projections can be met. “The SCA’s net tonnage and tolls have been broadly flat for the past four years and have only just reached the pre-financial crisis levels of 2008. To achieve their ambitious targets, the SCA would somehow need to see toll revenue grow at around 10% yearly, when the outlook for the shipping industry is nowhere near that level,” said Drewry.

The maritime analyst added that the new project would improve capacity, transit times and reduce delays –  which is very important given that containerships on the East-West routes are now bigger and more expensive to operate.

The canal has also built infrastructures capable of accommodating very large vessels, which is an important long-term requirement, according to Drewry.