The Suez Canal is integral to maritime development in the Middle East and naturally, at a time when the shipping industry is facing a challenging economic climate, the issues surrounding trade, shipping markets, infrastructure and investment are bound to stimulate lively debate, said Chris Hayman, Chairman, Seatrade.
The eighth edition of the biennial Seatrade Maritime Middle East (SMME) exhibition and conference, which takes place in Dubai from 31 October to 2 November 2016, will debate the latest issues surrounding the new $8 billion Suez Canal expansion and the consequences for the global maritime industry.
The new Suez Canal project that opened on August 6, 2015, includes a 35km parallel waterway, which runs alongside the original canal. In addition, 37km of the existing canal was made broader and deeper, to reduce transit times by up to seven hours for vessels travelling south and it now accommodates ships traveling in both directions along all 72km of the expanded route.
The Suez Canal Authority (SCA) expects to receive toll revenue of $13 billion annually by 2023, but revenue in 2015 actually dropped to $5.175 billion a 5.3% decline on 2014 revenues, due to market conditions.
However, according to HE Mohab Mameesh, year-on-year revenue to 6 August 2016 showed a 4% increase to $3.18 billion up from $ 3.06 billion, despite slowing trade.
An acceleration in the growth of world trade volume will be needed for the Suez Canal project to reach its revenue targets by 2023, said Hayman.
Some container lines, as well as tankers and bulk carriers on some itineraries, are still opting to sail via the Cape of Good Hope, even though the distance is 12,412 nautical miles (nm) from New York, compared to 10,117 nm via the Suez Canal, due to lower operating costs and low bunker prices.
“The SCA also faces renewed competition from the widened Panama Canal, which is looking to regain some of the Asia-US East Coast container trade it has previously lost to the Suez Canal,” commented Hayman.
Therefore, in a bid to recapture traffic, the SCA confirmed in June that all containerships coming from ports north of the Port of Norfolk (Virginia) on the US East Coast and heading to Malaysia’s Port Klang and ports eastwards were eligible for a 45% rebate on canal tolls up to December 31, 2016. Vessels departing from ports south of Norfolk and calling at Port Klang and eastwards can claim a 65% discount.
Other sweeteners have been added such as the an “experimental” new toll for Very Large Crude Carriers (VLCCs) transiting the canal from the Red Sea, which could save the ship’s operator in excess of $70,000 for each northbound trip from the Middle East to the Mediterranean.
Naturally, increased traffic through the new canal, will benefit ports throughout the Arabian Peninsula and the GCC countries continue to invest heavily in port infrastructure.
The government of Oman has invested more than $15 billion in the Sohar Port and Freezone, Qatar is building the $7.4 billion Hamad Greenfield Port project, Dubai will invest $850 million to develop Container Terminal 3 at Jebel Ali Port, and Saudi Arabia has committed $500 million to Saudi Global Ports (SGP) Container Terminal at Dammam King Abdul Aziz Port.
