The world’s two major shipping chokepoints have been widened, deepened and further developed to accommodate mega-ships and lure more traffic. At the same time, cheap fuel entices carriers to sail around the capes, and new alternatives – rail from China to Germany, and an Arctic route from Asia to Europe – pose challenges.
With the growth in vessel size, the world’s traditional shipping bottlenecks – the Suez Canal and Panama Canal – have undergone major expansion and upgrades so that more big ships can ply routes that have faced constraints. Traffic historically backed up outside the Suez because it wasn’t wide enough for two broad-beamed ships to squeeze past one another. The Egyptian government is making changes intended to increase traffic by accommodating larger vessels, reducing wait times and speeding up the time it takes to transit the canal.
The locks on the Panama Canal, not long or wide enough for mega-ships, have been replaced. Mega-ships recently began traversing the Panama Canal. The longest ships on the Panama Canal previously measured 965 feet. That increased to 1,200 feet with the opening of a third set of locks. At the same time, the maximum beam went from 106 feet to 160 feet, and maximum draft dropped from 42 feet to 60 feet. As a result, “Neopanamax” ships loaded with up to 14,000 TEUs are able to move through the canal.
In spite of the improvements to both canals, shippers and their customers continue looking for alternatives. Earlier this year, France’s CMA CGM carrier converted one of its Asia-U.S. routes to a round-the-world route that would skirt the Panama Canal and sail around the Cape of Good Hope at the southern tip of Africa to avoid the Suez. With fuel prices low, CMA CGM vessels can take the longer route at faster speeds – and avoid paying fees to transit the Suez and Panama canals.
Meanwhile China is encouraging its merchant fleet to investigate routing via the Arctic, where shrinking ice coverage is opening a seaway that cuts more than 3,000 miles off the distance from Shanghai to Western Europe. Ice coverage of the Arctic is now half that of four decades ago.
Landside, the Suez faces additional competition. China-Europe freight rail service is carrying auto parts, electronics, IT components and clothing from manufacturers in China’s inland provinces to Poland and Germany for onward rail and road shipment to European assembly plants and markets. The 6,800-mile trip from Chongqing to the German port of Duisburg takes 14 to 16 days, half the time of ocean freight at roughly half the price of air freight, according to the Journal of Commerce.