Thursday, October 21, 2021

Why the Suez Canal expansion worries shipping companies

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Written by By Marking Money, CNN

Since the 1960s, the Suez Canal has been a conduit for ships moving between Europe and Asia.

Today, about 6,600 vessels cross the waterway each day, and that number is expected to grow to about 14,000 by 2035.

Plans for an expanded canal are in the works, and Egypt is ramping up preparations. But they’re drawing resistance from shipping companies worried about increased costs and congestion. Some cargo owners say they’re worried blockages will restrict access to the world’s largest port.

In December 2016, the US port of Savannah, Georgia, switched its entire LNG traffic to the Panama Canal. That’s because of a reported six-month stoppage at the St. Petersburg, Russia, Suez Canal.

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The plans for the Suez Canal include a “new route through the Red Sea, a link between Asia and Europe,” Egypt’s transport minister said.

Here’s what you need to know about the canal and what shipping companies think about the rush to widen it.

1. The Suez Canal is two miles wide

Two miles is less than two feet. Construction began in 1869, and the bulk of the canal has been constructed in the last 100 years.

1 / 15 – The Suez Canal will be repaired, as planned. Photo Credit: Egyptian Presidency/Informal handout photo via Getty Images

The waterway, about halfway between Cairo and Ismailia, is called the “Silk Road,” as it allows ships from East Asia and the Middle East to enter and exit Europe and Asia.

The river that runs along the canal and locks the ships — the “Water Rhine” — makes up about three-fourths of its width. The river cuts a dotted path through the Red Sea and the strategic Strait of Bab el-Mandeb, where Yemen, Saudi Arabia and Oman share a key shipping lane.

The canal accommodates ships “up to 8,200 feet in length and up to 48,000 tons in weight,” with the capacity to carry up to 70% of the volume of an ocean liner, Egypt’s transport minister says.

But the rubber band of the canal, above, may be under strain from six major oil tankers that have also recently got stuck in the waterway.

A Turkish shipping vessel also tangled with a drifting line in recent months.

If there are problems?

“The new solution to the traffic congestion issue should eventually run smoothly,” said OTA’s Lordel.

International shipping companies have their own concerns about expanding the Suez Canal. They prefer that the expansion not squeeze cargo out of the Suez, as was seen in Savannah. They are worried about access restrictions and the development of navigation channels in water too shallow to accommodate large ships.

On Monday, the Emir of Qatar said the Suez Canal has blocked trade between the kingdom and the United States. Qatar’s ruler called the canal “a cultural and economic issue.”

Despite the concerns of shipping companies, they support Egypt’s plans to upgrade the canal and what Transport Minister Bishr has called the “guarantee of fairness and high standards of operations.”

There is a “national commitment” to maintaining the essential role of the Suez Canal and to expanding and upgrading it, Egypt’s transport minister said on July 3.

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