The New Suez Canal
Massimo DEANDREIS
SRM Managing Director
Cairo, November 29th 2015
Main Topics of the Study
The
Growth
of
Mediterranean
Trade
Strategies and Trends
Big
Phenomena and the Impact
on Ports and Shipping
2
South MED: a Fast-Growing Area
The cumulative GDP of Southern MED countries in 2014 was almost 6 times higher
than in 1970, with an average annual growth of 4.1% (Egypt: 5.6%). The EU recorded an
annual growth of 2.2% in the same period.
The cumulative Foreign Trade of Southern MED countries in 2014 was almost €750 bn
(1/6 compared with EU’s foreign trade). It was almost 5 times higher than in 1995, with an
average annual growth of 9.4% (Egypt: 11.3%), higher than the EU’s one (6.3%).
Foreign Trade: South MED vs EU. 1995=100
700
GDP: South MED vs EU. Constant prices (1970=100)
600
500
South Med
Average Annual Growth:
+4.1%
South Med
Average Annual G.
+9.4%
400
300
200
European Union
Average Annual Growth:
+2.2%
South Med
European Union
Average Annual Growth:
+6.3%
100
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
1100
1000
900
800
700
600
500
400
300
200
100
0
EU
South Med
Source: SRM on Unctad data
3
EU
South MED: a Fast-Growing Area
The cumulative GDP of Southern MED countries in 2014 was almost 6 times higher
than in 1970, with an average annual growth of 4.1% (Egypt: 5.6%). The EU recorded an
annual growth of 2.2% in the same period.
The cumulative Foreign Trade of Southern MED countries in 2014 was almost €750 bn
(1/6 compared with EU’s foreign trade). It was almost 5 times higher than in 1995, with an
average annual growth of 9.4% (Egypt: 11.3%), higher than the EU’s one (6.3%).
Foreign Trade: South MED vs EU. 1995=100
700
Egypt
Average Annual Growth:
600
+11.3%
GDP: South MED vs EU. Constant prices (1970=100)
Egypt
Average Annual Growth:
+5.6%
500
South Med
Average Annual Growth:
+4.1%
South Med
Average Annual G.
+9.4%
400
300
200
European Union
Average Annual Growth:
+2.2%
South Med
EU
European Union
Average Annual Growth:
+6.3%
100
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
1100
1000
900
800
700
600
500
400
300
200
100
0
Egypt
South Med
Source: SRM on Unctad data
4
EU
Egypt
Italy-South Med Trade: +81% in the 2001-2015 period
Trade relations between Italy and Southern MED countries (net of Energy products)
is estimated at € 35.5 bn in 2015, +81.2% compared to 2001; Italy-Egypt trade: €3.5
bn in 2015, +80.3% compared to 2001
Competitors’ performances in 2001-2015 period: France: +76%; Germany: +125%.
Italian exports vs. Southern MED countries doubled in the 2001-2015 period (€ 28 bn).
Italy’s exports vs. South Med and Gulf (€45.9 bn) are equal to Italy’s exports vs. China
and the US combined (€46.8 bn).
Trade with the South Med Area: Italy and European Competitors. €bn
55.2
44.1
35.5
25.0
24.6
19.6
Italy
France
Germany
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
* SRM estimates
Source: SRM on Eurostat and data
5
Germany
France
Italy
Italy-South Med Trade: +81% in the 2001-2015 period
Trade relations between Italy and Southern MED countries (net of Energy products)
is estimated at € 35.5 bn in 2015, +81.2% compared to 2001; Italy-Egypt trade: €3.5
bn in 2015, +80.3% compared to 2001
Competitors’ performances in 2001-2015 period: France: +76%; Germany: +125%.
Italian exports vs. Southern MED countries doubled in the 2001-2015 period (€ 28 bn).
Italy’s exports vs. South Med and Gulf (€45.9 bn) are equal to Italy’s exports vs. China
and the US combined (€46.8 bn).
Trade with the South Med Area: Italy and European Competitors. €bn
57.8
55.2
USA
Germany
52.6
China
44.1
37.7
35.5
25.0
24.6
19.6
5.1
Italy
France
Germany
China
USA
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*
* SRM estimates
Source: SRM on Eurostat and data
6
France
Italy
The Mediterranean Basin is Becoming a Central Item in the
World Agenda: Italy is 1st in Sea Trade
The freight traffic in the Med basin increased by more than 120% in the 20002014 period.
The Mediterranean catches around 19% of the global freight traffic; the
percentage was 15% in 2005.
With € 36.4 bn, Italy is the biggest sea trade partner of the South Med Area.
76% of trade between South Med Area’s and Italy travels by sea.
Southern Med Area’s Maritime Trade with the Main EU Countries
€ Bn
36.4
30.3
27.8
Forecasts*
41.0 Italy
37.0 France
32.0 Spain
31.6 Germany
26.0
Spain
France
Italy
Germany
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Fonte: Eurostat, 2015
* Forecasts SRM
7
The Analysis of Container Ports by Geographic Area: a
comparison between Med Area and North Europe
Baltic Sea Italy
Atlantic 2%
7%
2%
UK*
7%
2% 8%
2%
7%
Black Sea
6%
7%
NORTHERN
RANGE IS
SLOWING
2008
East Med
11%
Northern
Range
43%
47%
2014
7%
12%
MED AREA IS
GROWING
8%
West Med
12%
South Med
10%
Source: SRM on Port Autorities
In the 2008 - 2014 period, the ports of the East Med Coast increased their
market share from 7% to 11%. The Southern Med Coast grew too.
8
Ranking of Container Hub Ports in the Mediterranean Basin:
the Market Share Piraeus
Tanger Med
13%
Cagliari
3%
12%
11%
2%
2% 5%
18%
Gioia Tauro
11%
Marsaxlokk
11%
2008
19%
17%
Valencia
16%
Source: SRM on Port Autorities
Port Said
15%
2014
7%
18%
Algeciras
17%
Damietta
3%
2009–2014: The Market Share of Southern Hub Ports (Tanger Med; Port Said;
Damietta) is stable at 30%. Algeciras ranks 1st.
Tanger Med and Piraeus have had a dramatic growth.
Egypt plans to complete a side Channel in the East Port Said near the Suez
Canal in order to speed up shipping and allow ships to enter the port by the end
of June 2016 this new side channel will increase traffic.
9
New Centrality of the Mediterranean: The Emergence of
Europe-Far East Route
Within the three main deep sea East-West shipping services the Europe-Far East
progressively gained traffic raising its share from 27% in 1995 to 44% in 2014.
In 2014, the Europe-Far East and the Transpacific are definitely the two biggest trade
lanes, accounting both for 22 mln. TEUs of traffic. As a result of this growth, the
Mediterranean basin and its ports recovered their own “centrality”, thanks to the transit
of (almost) all mother vessels via the route Suez.
Estimated containerized cargo flows on major East–West container trade routes, 1995–2014
(percentage TEU)
13%
20%
42%
53%
Transatlantic
Transpacific
Europe-Far East
44%
27%
Source: SRM on Unctad, 2015
1995
2014
10
The traffic in the Suez Canal: Ships and Cargo
Transit goods account for 8-10% of the entire globe. In 2014, 822 million tonnes
of goods passed through the Canal.
Between 2000 and 2014, north-south container trade volumes grew by 187% while
the south-north ones grew by 220%.
17.000 ships passed through the canal.
Between 2000 and 2014 the Canal’s traffic trends recorded a 120% increase in transit
goods.
Ships Number
25
of which containerships
Cargo
900
20
700
600
15
500
400
10
300
200
5
100
-
0
2007
2008
2009
2010
2011
Source: SRM on Suez Port Autority, forecasts 2015
11
2012
2013
2014
2015
Cargo ton (million)
Ships number (thousand)
800
Main Cargo Flows Southbound through the Suez Canal.
Var. % 2001-2014
416 mln
tons
Source: SRM on Suez Canal Authority, 2015
12
Main Cargo Flows Northbound through the Suez Canal.
Var. % 2001-2014
406 mln
tons
Source: SRM on Suez Canal Authority, 2015
13
The Strategic Role of Ports and Logistics in the Gulf
The UAE retained its position as the best performer among Arab
countries and the broader region.
Dubai Port ranks 1st handling 15,2 million TEU in 2014 and growing by
more than 36% in the period 2009 - 2014.
Overall, the container traffic of the Area grew by more than 23% in the
in the period 2009- 2014.
Gulf Area’s Container traffic 2009-2014 (000 of tonn)
16.000
Dubai
14.000
Port
Dubai
12.000
Jeddah
Khor
Fakkan/Sharjah
10.000
8.000
6.000
Jeddah
Salalah
Khor
Fakkan/Sharjah Shahid Rajaee
Salalah
Dammam
Dammam
Shahid Rajaee
4.000
2.000
2009
2010
2011
2012
2013
2014
Source: SRM on Port Authorities, 2015
14
Gulf
∆ % 2009Country
2014
UAE
Saudi
Arabia
36.9
UAE
38.2
Oman
-13.9
Iran
Saudi
Arabia
-35.9
35.9
42.6
23.2
Two Big Phenomena in the Maritime Economy:
1. Increasing Ship Size
New Panama Canal’s Limit
13,200 TEU
New Suez Canal
15
The Orderbook for 2018
16
2. The Big Alliances among Carriers
The big alliances create economies of scale-reducing costs, improving profitability,
services and environment.
There is a relevant interest of big alliances for routes through Suez Canal.
MARKET CONCENTRATION IN TWO ROUTES THAT INVOLVE SUEZ
The big alliances «2M» and «Ocean Three» are mostly active on the route AsiaMed
Asia - North Europe
G6
23%
CKYHE
26%
2M
32%
G6
8%
Others Asia - Med
5%
CKYHE
20%
O3
19%
O3
27%
Source: Drewry, 2015
17
2M
39%
An Example of the New Suez Canal Impact: Route Benefits
The graph shows 4 examples of routes and the impact of the New Suez Canal
Case studies on a panel of strings
Suez
Panama
Distance (Nautical miles)
Days of sailing
Days of sailing
Shanghai-Rotterdam
10,525
29
37
Hong Kong-New York
11,593
32
31
Shanghai-New York
12,370
34
30
Shanghai-Houston
13,932
39
28
Trade route
=
Route where Suez is already more
convenient
Route where Suez will be more
potentially convenient than Panama
Route where Suez will be much more
potentially convenient than Panama
Route where there are no
significant effects
18
=
The Economic Impact of the New Suez Canal: Operational
Cost Savings and Lower Costs of Immobilization
SRM estimated that using the Suez route, any shipping company may have an
average saving between 5% and 10% on the total operating costs
(depending on routes, distances and companies characteristics).
For each ship, the time reduction from 18 to 11 hours, due to the New Suez
Canal, would lead to an estimated cost saving of:
•
€10,499 for each ship (average)
€12,004 for each containership
€150,000 for each cruise ship
If we consider that, in 2014, 17,148 ships passed the Canal, 6,129 of which were
containerships:
Total Average expected saving
will be: €180 m per year
South East Asia
€61 m
North West Europe, U.K. €49.4 m
Lower costs of immobilization cargo
will be: €154.6 m per year
19
Arabian Gulf
€48.4 m
Current and Future Benefits of the New Suez Canal
Current benefits
Lower operational costs for
maritime companies: €180 m
Lower costs of immobilization
of cargo: €154.6 m
Estimated benefits by 2030:
Reduction of operating costs
(net current value):
€2.5 bn
Lower freight immobilization
(net current value):
€1.9 bn
New Suez Canal:
The direct economic benefits for the operators in the
transport sector
€4.4 billion
Indirect
benefits:
environmental benefits + reduction in the number of hours spent waiting
and for anchoring operations of all the ships transiting the Canal.
20
The Economic Impact of the New Suez Canal on Italian Ports
Case study only on one route: Far East-East Coast US
A case study on the trade route Far EastEast Coast US (accounts 7.4 million TEU)
51% pass through
Panama Canal
3.8 m TEU
(Source: Alphaliner)
49% pass through
Suez Canal
3.6 m TEU
25%
1 m TEU
18%
171,000
If the New Suez Canal catches this Percentage
of the total traffic through Panama
The additional quantity of TEU that will
sail the Mediterranean via Suez
Italy market share of the Transhipment traffic
in Med
The amount of TEUs that Italy can intercept
21
The Effects of the Enlargment for the Cruiser Market may
bring Development
170 ships operate in the cruise market, 67 of them passing through the Suez
Canal.The enlargment of the Canal could increase the number of cruise for
the major Egyptian ports (Hurgada, Safaga and Sharm El Sheikh).
As a result:
1.
New structured packages dedicated to the Red Sea could be offered as a new
item by major operators.
2.
It could de-seasonalize the offer extending the cruise season to autumn and
winter also providing tours and cultural excursion across the South
Mediterranean, the Red Sea and the Gulf.
Estimated
Benefits
In the medium term, the impact could be about 4%
of the market value of the Mediterranean, equal to
1,000,000 cruise passengers in the 5 main ports of the
Red Sea.
economic direct impact of €120 per passenger.
22
Conclusions
The New Suez Canal will have a major impact on
shipping and trade in the Mediterranean.
It will increase the centrality of the Mediterranean as
a bridge among Asia, the Gulf and the East Coast
of the North America.
The two phenomena of naval gigantism and
shipping alliances will be emphasized by the New
Suez Canal.
Italy is one of the European countries that could
benefits more from this new infrastructure.
23
SRM Mediterranean Observatory
2011
SRM Maritime Observatory
2014
Thanks for your attention
Websites: srm-maritimeconomy.com
srm-med.com
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