Fresh delays in enlarging the locks of the Panama Canal has resulted in the Suez Canal steadily attracting more Asia-to-east coast of North America traffic from the Central American waterway because of the economies of scale it offers ocean carriers leading to further increase of its market share, according to Drewry Maritime Research.
In addition, ocean carriers "will not be too troubled by the further delay to the Panama Canal's new locks, as they have already gained some, if not all, of the economies of scale that the new locks will offer," the London-based consultancy said.
The Suez Canal Authority has already persuaded several ocean carriers on the arterial Asia-to-east coast of North America route to switch from the Panama Canal this year. The waterway has increased its share of capacity on the route from around one-third between October 2010 and October 2012 to 42 per cent in October 2013, with the Panama Canal's share falling from two-thirds to 58 per cent. The further postponement of the opening of the enlarged Panama Canal from mid-2015 to the end of 2015 will give the Suez Canal Authority more time to attract more carriers, Drewry said.
The Panama Canal Authority will be further concerned about the continuing reluctance of North American importers to switch traffic away from the West Coast to the East Coast. Another cause of concern for the Panama Canal is that cargo growth to the east coast of North America is stalling at a time when ships transiting the Suez Canal have been taking on more traffic at Asian ports. Until recently, Suez Canal-bound ships have been restricted to Southeast Asian ports as a result of the shorter distance compared with the Panama Canal, but now they are regularly loading at northeast Asian ports.
However according to Drewry, the damage caused by the overdue opening of the Panama Canal's new locks is not irreparable. "Everything currently being lost through Suez could easily be switched back to the Panama Canal depending on the level of its new tariffs."
The Suez Canal Authority currently charges about US$1 million for a combined northbound and southbound transit by ships of between 8,000 and 9,000 TEU, according to the Shipping Gazette.