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Would building the Kra Canal make sense?

Would building the Kra Canal make sense?
Over the last couple of days there has been great excitement over the idea that building the Kra Canal in southern Thailand could be back on the agenda, this time possibly with Chinese backing.

Now while officials from both the Thai and Chinese governments have denied there are plans to build the canal it begs the question whether the project, which has been on the drawing board for nearly 400 years, would actually make any economic sense.

The main attraction of the Kra Canal is that it would enable shipping to bypass the narrow Straits of Malacca and Singapore providing greater security over the supply chain for North East’s economic powerhouse nations.

The world’s two existing major canals for ocean shipping – the Panama Canal and the Suez Canal - enable ships avoid having to sail round entire continents, South America and Africa respectively. This provides for huge a saving of time and distance, in the case of Suez Canal around 7,000 km, and also avoids difficult waters in terms of sea and weather conditions.

Avoiding Peninsula Malaysia and Singapore by contrast is a distance of only around 1,200 km, a three-day transit. This makes the economics of building a canal, estimated to cost $28bn, much harder to justify than even the controversial $40bn Nicaragua Interoceanic Canal project.

It is highly questionable as to why shipowners would want to pay what would no doubt be a hefty toll just to avoid three days sailing, or less if one factors in that the Panama Canal Authority say the average transit time for the Panama Canal is 8 - 10 hours.

There is also a question of how much of the traffic from the Malacca Strait a canal would actually be able to take. Roughly 14,000 vessels transit the Panama Canal a year, while in 2014 over 79,000 vessels transited the Malacca Straits.

On top of this geography through which the canal would have to cut would make it more difficult to build than either Panama or Suez Canal. The height of the interior mountain chain of the Kra Isthmus is 75 m compared to the highest on the Panama Canal which is 64 m.

The region of Thailand the canal passes through is politically unstable and would potentially have major security concerns. One would have to also question why the Thai government, which has been fighting a separatist movement in the south for many years, would want to physical separate the region with a canal.

Despite the recent days excitement building the Kra Canal would still seem to be far off from happening.