Containers Using Cape of Good Hope Route Cost Suez Canal $10m

493

  • An increasing number of container lines are routing vessels via the Cape of Good Hope.
  • This move will cause the Suez Canal Authority to lose over $10m in revenue.
  • Tonnage surplus and low bunker prices have prompted ocean carriers to avoid the canal.
  • The distance between the two routes is around 3,500km on Singapore-Rotterdam sailing.
  • SCA has announced cuts in transit fees up to 17% for ships.

According to an article published in The Loadstar and authored by Gavin van Marle, the Suez Canal Authority (SCA) is set to lose over $10m in revenue from container lines routing vessels via the Cape of Good Hope rather than its waterway.

Cape of Good Hope threatens Suez Canal

According to new research, the number of containerships that have opted to use the Cape route and bypass the Suez Canal has risen to a historic peace-time high, including at least 20 sailings on the Asia-Europe, Europe-Asia and North America east coast-Asia trades.

A unique combination of a container tonnage surplus and rock-bottom bunker prices has increasingly prompted ocean carriers to avoid the canal – and thus its fees, the analyst noted today.

Rather unusually, even three westbound Asia-Europe head haul sailings have opted for the Cape route, all operated by CMA CGM.

Less bunker price and demand affect the market 

Carriers very rarely choose this longer route for the time-sensitive head haul, but the low bunker price and lack of demand in European markets, hit by the Covid-19 lockdowns, have suddenly made such moves viable, it added.

As well as the three Ocean Alliance westbound sailings – two on the FAL3 service and one on the FAL1 – Alphaliner tracked nine Europe-Asia and eight North America east coast-Asia backhaul sailings avoiding Suez with vessels operated by Evergreen, MSC, ONE and Cosco.

Suez Canal charges vary according to the size of the vessel, it’s routing, the number of containers carried and the proportion of laden boxes, but as a rule of thumb, a fully laden 20,000 teu container vessel on a head haul Asia-Europe sailing could expect to pay around $700,000 in transit fees.

The distance difference between the two routes is around 3,500km on Singapore-Rotterdam sailing.

SAC slashes tariff rates

In response to the moves, the SAC has announced cuts in transit fees, varying from around 17% for ships involved in European trades, to 60%-75% for vessels returning to Asia from the east coast of North America.

Did you subscribe to our daily newsletter?

It’s Free! Click here to Subscribe!

Source: TheLoadstar

LEAVE A REPLY

This site uses Akismet to reduce spam. Learn how your comment data is processed.