THE SHIPPING ASSOCIATION OF TRINIDAD & TOBAGO
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IN INTERNATIONAL SHIPPING
11 August 2014
Suez to Lose Its Exclusivity in Large Containership
The multi-billion-dollar plan
could nearly double the canal’s capacity by 2023 thus
significantly reducing the
bottlenecks. The reduction is
expected to solve the congestion problems by enabling ships to sail both ways
as the waterway is currently
too narrow for to allow twoway transit.
Nevertheless, as the ambitious plans are slated for
completion by next year,
shipping industry players
doubt that this will be done
in such a tight timeframe.
What is more, the Suez Canal
expansion plans are more
likely to cater for containership transits, in strong competition with the expanding Panama Canal, rather
than respond to the demand from oil tanker transits, according to BIMCO.
“Due to widening and
deepening operations carried out over previous
years, the Suez Canal is
able to accommodate all
ships except fully laden
VLCCs. As far as we can
tell, the expansion plans
would allow for speedier
transits,” BIMCO explains.
Chief Shipping Analyst at
BIMCO, Peter Sand, says:
“Suez will lose its exclusivity
in large containership transits soon. A way to retain
an edge in the market will
be to improve your product. With Panama holding
the upside on sailing distance by a small margin,
the key parameters left will
be fast transits and a competitive pricing of the service provided. In addition
to that, the development of
a larger transhipment hub
to serve the EastMediterranean and Black
Sea market could increase
the attractiveness of the
Canal.”
The 145-year old existing
Suez Canal is generating
more than USD 5 billion
income to Egypt on a
yearly basis.
The Canal provides the
shipping industry with a
significant short-cut (saving
7 days), when sailing from
the Far East into Europe.
Source: World Maritime
News
Inside this issue:
Suez to Lose Its Exclusivity
in Large Containership
Transits?
1
China shows interest in 4th
set of locks in Panama
2
Overcapacity Likely to
Persist in Container
Shipping Market
3
IN INTERNATIONAL SHIPPING
PAGE 2
China shows interest in 4th set of locks in Panama
The third set of Panama Canal locks aren’t even completed yet, and yet Panama continues to talk openly about a fourth set of
locks to handle even bigger ships.
The idea of a fourth set of Panama Canal locks now has something in common with the new canal proposed by Panama’s
neighbor to the north, Nicaragua: China could possibly play a large role in making it happen.
The Panama Canal announced on Friday that its administrator, Jorge L. Quijano, “held an informative meeting” with a delegation
headed by Mo Wenhe, chairman of the China Harbour Engineering Company (CHEC) and Wei Hua Wang, a representative of the
Chinese-Panamanian Office of Business Development.
According to the Panama Canal release, Mo showed interest in the development of projects in the Panama Canal during the upcoming years. In particular, Mo said, “We are exploring our participation in all canal projects, especially in the design, construction
and financing of a fourth set of locks.”
The release said CHEC is a leading full-service provider of engineering-procurement-construction, build-operate-transfer and public
-private-partnership projects for the public and private sectors. Currently, it said, CHEC is present in more than 80 countries, including Panama where it will be setting up its regional headquarters. Last June, then Honduras President Porfirio Lobo signed a
memorandum of understanding with CHEC to build a multibillion interoceanic railroad including up to 10 rail lines.
In an interview with JOC.com in June, Quijano said that by the time the third set locks open in 2016, shipping companies will have
taken delivery of new ships of all kinds that are too large to fit into the new locks. “At this point in time, it (the fourth set of locks) is
not financially feasible, but we do have a conceptual design and location that could accommodate an E-class, for example,” Quijano told JOC.com, referring to Maersk Line’s 18,000-TEU Triple E ships.
For many years, Panama Canal traffic grew even though its locks were increasingly out of date, given growth in ship sizes. The
largest ship that can currently transit the Panama Canal is roughly 5,000 TEUs, while 18,000-TEU ships are now in service and
ships larger than 19,000 TEUs are being built. Thus, it is arguably a change in approach that the Panama Canal is already showing
impatience with the idea that the third set of locks, which will be able to accommodate 98 percent of the world container fleet by
2018, may not be large enough. The new factor may be Nicaragua, whose controversial $40 billion China-backed canal proposal
has received a series of endorsements and government approvals, most recently from a Nicaraguan government committee that
in July approved the proposed route for the canal.
Panama earlier this year heaped criticism on the Nicaragua canal idea, but more recently has been restrained, saying it’s not a
competitive threat.
Source: Journal of Commerce
IN INTERNATIONAL SHIPPING
PAGE 3
Overcapacity Likely to Persist in Container Shipping Market
“The industry saw a disappointing first half and a more
encouraging second half in 2013. Moving into 2014,
there has been cargo volume increase and a generally
more positive sentiment than last year. In total, it is
expected that the container transportation industry
posted improved results for the first half of 2014,” said
Chairman of OOIL, Mr. C C Tung, commenting on
market situation in container transport business’ half
year results.
According to Tung, such improvement, however, is
likely to be capped given the large newbuilding orderbook and the anticipated next round of newbuildings
that will likely materialise over the next twelve
months.
Lifting of the Hong Kong-based container shipping
and logistics service company, Orient Overseas Container Line (OOCL), for the first half year increased
10% and load factor increased by 5 points thereby
generating an overall revenue increase of 4% over the
same period last year.
While freight rates across various trade lanes had a mixed performance against first half last year, additional liftings made up the
revenue shortfall. The first six months of 2014 saw a robust growth in cargo demand in the major European and American markets.
OOCL achieved 8% reduction in bunker cost against a 3% increase in capacity and 10% increase in lifting.
“Industry will continue to face overcapacity “
During the first six months of 2014, OOCL took delivery of two newbuildings, both of which are 13,208 TEU Mega Class vessels.
Tung said, “We expect to take delivery of another four 8,888 TEU SX Class vessels in 2015. These newbuildings represent the end
of our last round of newbuilding orders.”
Mr. Tung commented on the outlook in the container shipping marketby saying, “The industry will continue to face overcapacity
in the coming years. Despite the gradual recoveries of the developed economies, demand growth is not expected to return to the
pre Global Financial Crisis level over the short to medium term.
At the same time, gross static supply growth remains high with the orderbook-as-a-percentage-of-fleet ratio at 9.3% and 9.8% for
2014 and 2015 respectively. Unless bunker prices can decline to a more reasonable level, the drive for scale and fuel efficiency will
translate into continued newbuilding projects. As a result, the challenge of overcapacity will likely persist over the short to medium
term.
“Our investments in a new port facility in North America and IT capabilities will ensure our competitive edge in the industry going
forward. The Group is building its logistics business and expect meaningful contribution to the Group over the medium to long
term.”
Mr. Tung concluded that, “Given the market conditions, the first half of 2014 was satisfactory for OOIL. During the second half of
the year, the Group will redouble its efforts in its focus on cost efficiency and operating margin. As the global economy gradually
recovers, there is expectation that the container transport industry will find itself in a more positive operating environment.”
OOIL owns one of the world’s largest international integrated container transport businesses which trades under the name OOCL.
Source: World Maritime News