Suez Canal makes play for Asia-US East Coast traffic

Cairo: Egypt, seeking to profit from growing Asian exports to the U.S., plans to provide incentives for ships to use the Suez Canal instead of sending goods to West Coast ports or through the Panama Canal. ''We want to lure more containers into using the US East Cost ports via Suez,'' Admiral Ahmed Fadel, chairman of the Suez Canal Authority, said in an interview earlier this month to Bloomberg at his headquarters in the northeastern city of Ismailia. ''We will give service with competitive and lower prices.'' The authority, whose canal links the Red Sea to the Mediterranean, is strengthening ties with U.S. East Coast terminals including the Port of Virginia before the Panama Canal completes a seven-year, $5.2-billion expansion that will increase its capacity. More than 18,000 ships crossed the Suez Canal last year, compared with an annual average of 14,000 for Panama. China's exports to the U.S. rose to $287.8 billion last year from $100 billion in 2000, according to the U.S. Census Bureau. Suez handles less than 6 percent of the containers traveling between Asia and the U.S., with the rest going to the West Coast, where it is carried inland by rail and truck or transferred to smaller ships able to navigate Panama.
With delays, strikes and costs for inland transport rising, Suez would offer a direct all-water route to the East Coast, said Fadel, formerly the head of Egypt's navy.
Trade from Asia increased Suez's container tonnage 19 percent in the year ended in November, bolstering revenue by 20 percent to a record $4.2 billion.
The International Longshore and Warehouse Union, mainly representing dock workers on the U.S. West Coast, and the Pacific Maritime Association, representing employers, will negotiate new contracts next year. Talks in 2002 led to service disruptions in Los Angeles and Long Beach.
Suez gets 3,000 to 5,000 40-foot containers a week from Asia-U.S. trade, out of a total of more than 79,000, according to the Transpacific Stabilization Agreement, a group representing 14 carriers.
APL Ltd., the container services unit of Singapore-based Neptune Orient Lines Ltd.and a member of the carriers group, introduced an Asia-to-U.S. East Coast route in August called ''Suez Express,'' operating eight vessels on the route.
The canal, which has offered 35 percent discounts for gas tankers heading from the Persian Gulf to Europe, can handle the biggest container ships.
Suez has a two-way passage and can accommodate vessels carrying as many as 14,000 containers. That represents about 171,000 metric tons of manufactured goods, three times more than the Panama Canal's maximum capacity. Most container ships can carry no more than 9,000 boxes.
Not all East Coast ports will be able to handle the biggest ships that can get through Suez, said Niels Erich, a spokesman for the Transpacific Stabilization Agreement.
''We are providing a service in a very competitive market,'' said Fadel, speaking from his office overlooking the canal built by Frenchman Ferdinand de Lesseps in 1869. The waterway, run by Fadel since 1996, cuts through the Egyptian desert that separates Asia from Africa. [01/01/08]

Add Seatrade Maritime News to your Google News feed.