Suez & The Panama Canal – Next In Line To Get Affected!


The ongoing crisis in the container shipping industry will next affect the Panama and Suez canals.


As we have been hearing about the crisis in shipping industry it has started affecting its tributaries.  First in line stands the world’s two principal trade arteries.  The Panama and suez canals feel the ripples of this situation as vessels are diverted to multiple sailing ways.  Carriers take the southern African Cape of Good Hope route over both canals.

Main rationale behind the change:

  1. Overcapacity of vessels.
  2. Rock bottom bunker cost.
  3. Ultimately low baltic dry index.

Other reasons behind the change:

  • Avoiding canal transit fees,
  • Avoiding the elongated sailing route, which adds another week to,
  • Avoiding extra transit time that could potentially “soak up” between 60-80 vessels (50% of these would be ultra-large container vessels),
  • Moving off some of the industry overcapacity which is causing freight rate volatility.

Carriers have now implemented both slow-streaming and super slow streaming to overcome this financial situation. Since the end of October 2015, 115 vessels deployed on Asia-USEC and Asia-North Europe services have made the back-haul trip to Asia by sailing round the Cape of Good Hope rather than through the canals despite using them on the headhaul legs.

Source: The Loadstar


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