Impacts of new shipping routes/passages : impacts of Suez canal's expansion on stakeholders
Date of Issue2017-05-09
School of Civil and Environmental Engineering
Globalization has resulted in increased demand of world trade which drives the shipping demand. Ship’s size is growing exponentially especially after the financial crisis in 2008 since carriers seek to reduce the unit cost which is the key to surviving in the continuously gloomy economy. This development has led to the upgrade in maritime infrastructures and changes in the landscape of shipping recently. The recent expansion of Suez Canal and Panama Canal, as well as the emerging Arctic route, are constantly in the public spotlight. However, there is a lack of studies on the impacts of Suez Canal’s on various stakeholders in the industry after the inauguration. Therefore, this research paper aims to fill the gap and provide additional competitive analysis with the other two routes. According to the interviews and surveys conducted, although the expansion has reduced the waiting time up to 8 hours, it may only serve as a bonus for carriers rather than a determining drive to use the canal. Some carriers even reroute to sail around the Cape of Good Hopes due to the low bunker costs and high canal fee. Therefore, the expansion may increase the canal’s capacity of handling vessels to cater for future demand but not necessarily increase its revenue. With the opening of expanded Panama Canal in August 2016, the revenue may even drop further, as volumes for Asia-US East Coast passing through Suez Canal has shifted back to Panama Canal. While with the relatively low bunker costs and the uncertainty in the Arctic, the Northern Sea Route has not affected the volume in Suez Canal much. Although there is still not much increase of canal revenue to be contributed to the Egypt’s economy, it is undeniable that it helped to alleviate the unemployment crisis of the country. Moreover, it helped to facilitate the development of Suez Canal Economic Zone, which may in return help to boost up the number of vessels passing through the canal and thereby increase the revenue of the canal. Yet, its success may depend on various factors such as the execution of the plan, its competitiveness and the improvement of the fundamental issues in the country.
Final Year Project (FYP)
Nanyang Technological University