Suez, doubts and expectations three years after the expansion

The operators’ opinion: canal traffic is starting to grow, but it is not certain that it will reach Italy.

THE Mediterranean Sea lost its commercial centrality on 12 October, 1492, with the discovery of America and the shift of the main European routes to the Atlantic, and it regained it on 17 November, 1869, with the inauguration of the Suez Canal. But European traffic has continued to favour Atlantic routes for almost a century, with the exception of oil supplies from the Middle East. The turning point came with the Chinese economic miracle of the last thirty years, which according to historians was promoted by the reform programme launched in 1979 by President Deng Xiao Ping. Products made in China have become standard items in European shops and traffic through the canal has grown exponentially. The size of container ships has also increased as a result, so much so that the Egyptian Government decided to widen the canal several years ago. Egypt inaugurated the new Suez Canal with expanded capacity in August 2015. The objective was to increase the canal’s revenue from $5.3 billion in 2014 to $13 billion in 2024. However, in the first months after the opening, traffic had not increased as expected (in 2015 revenues were $5.175 billion, in 2016 they fell by 3.2 percent to $5 billion) and since then the government has begun to adjust tariffs. This operation is ongoing, and has borne its first fruit. The Suez Canal saw its revenues increase in 2017, from $5 billion in 2016 to $5.3 billion in 2017.

This major new construction project was also expected to be a driver of increased traffic in Italy. What is the situation today, and what are the operators’ expectations?

According to Confetra’s president, Nereo Marcucci, “no large-scale effects have been felt. The new canal certainly cannot fix the crisis in traffic that occurred after 2008. We are currently seeing an overall recovery in traffic, but it is difficult to distinguish the spread generated by the expansion of the channel.”

Federagenti’s Chairman Gian Enzo Duci explained, “Today, the Suez Canal is 100% accessible to the container fleet currently in operation. These are ships that pass through the Mediterranean, but that do not necessarily produce wealth in the Mediterranean, or even just transport goods to and from the Mediterranean. Thanks to the expansion, the Suez Canal recorded a 15% increase in revenue in the first two months of this year, up by $116 million. The tonnage of ships sailing through Suez in the first two months of 2018 exceeded 172 million tonnes, compared with 154 million tonnes in the same period of the previous year.

These figures confirm that world trade is holding up despite political tensions and that shipping is particularly ready to respond to the new infrastructure supply, such as the (expanded) Suez channel. However, it is necessary to work towards creating an automatic connection between this extra traffic through Suez and the Mediterranean’s capacity to absorb it. The offering of an efficient logistical-port system, but also and particularly economic growth within the framework of the individual countries, are the preconditions for “making these ships stop.”

According to Pierluigi Maneschi, president of the Sisam group and vice president of Italia Marittima: “Aside from VLCCs, the Suez Canal is now able to guarantee that container ships over 20,000-TEU capacity can sail through it. This does not automatically mean that the Mediterranean is growing at the same pace as the Canal. Certainly some East Med areas are recording a strong traffic growth rate, but this is essentially a consequence of economic growth in the East Med and Gulf area. Suez offers opportunities, but the capabilities and efficiencies of these countries’ ports determine how much can be made of these opportunities.

Mario Enrico Disegni, who is president of Fedespedi’s maritime section, said: “I don’t think that there will be major variations in traffic volumes in the immediate future, due to the European economic situation and the markets’ absorption capacity. I don’t see much optimism but I hope that there are no more disturbances on an international level.”

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