Canal expansion schemes miss trade boat: analysts

By Jessica Berthereau, AFP

LONDON — Vast projects to expand the Suez and Panama canals are being talked up as the biggest upheaval for decades in global maritime traffic, but experts say they could be outflanked by a trade shift towards Asia. In recent years, freight traffic traveling from Asia to the east coast of the United States has increasingly circumvented the Panama Canal and its restrictions on ship size in favor of the Suez route open to most big vessels. Egyptian President Abdel Fattah el-Sissi has launched plans for a second Suez canal in parallel to the existing one at a cost of US$4.0 billion. To attract business back, the board of the Panama Canal began work in 2007 to widen the channel to permit the passage of ships carrying a much greater volume of containers. The broader channel would allow for vessels carrying 12,000 TEU containers (TEU, or “twenty-foot equivalent unit,” is the standard unit of measurement for containers) — a big increase from the current capacity of 5,000 TEU. Work on widening the Panama Canal continues despite a dispute on cost overruns. Meanwhile, Chinese interests are involved in a project still on the drawing board to link the Pacific and Atlantic oceans with a second canal through Nicaragua. But while the channel through central America should attract an increase in business, “it will not be revolutionary” in terms of global traffic, said James Frew, an analyst with Maritime Strategies International. He also highlighted the efficient overland distribution network from California to the U.S. east coast, which gives shippers an alternative route. Panama Project to have

‘some impact’

The enlargement of the Panama Canal “should have some impact on container trades,” explained Ralph Leszczynski, head of research at the Banchero Costa brokerage. “However, for most shipping business such as dry bulk and tankers it’s not really such a big deal,” he said. There are 4,500 container ships in the world compared to at least 10,000 dry cargo ships and more than 7,000 tankers.