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Will Suez Canal’s value sink further?

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Alternative modes of consignments certainly threaten the canal’s position

Suez Canal Authority’s (SCA) recent antics unfortunately have dented its reputation. While the wrestle continues, charterers have probably lost chunks of their revenue to alternative modes of shipping – and it is not by sea.

A silver lining for land
The week-long clog at the Suez Canal turned out to be a blessing for alternative shipment modes; especially for cargo from China to Europe. In a media report, Simon Wong, CEO of U-Freight Group remarked: “Clearly supply chain planners are reappraising what was once a completely dominant Suez Canal route from China into Europe, with intermodal rail continuing a sharp upward trajectory in 2021, following on from a strong 2020.”

Wong added that U-Freight handles significant consignments from China to Sweden, Germany, Italy, Switzerland, and The Netherlands in particular, together with smaller volumes to other European countries. U-Freight’s network of long-standing agents handles the shipments once the shipments arrive at the three rail freight hubs on the continent.

A threat for Suez Canal
Indeed, cargo owners’ alternatives to transport their goods are a big threat to maritime. The worldwide pandemic resulted in several borders slammed shut against the high-risk nations and forced a global halt. The soaring rates are not precisely alleviating the situation. It will take a while before shipping recovers.

Suez Canal strengthened its position since the reopening in 2016 and handled countless vessels’ passing through with hefty tolls. It essentially halves the route between Gulf and London, compared to the detour around South Africa. The chronicle of events since late March 2021 shifted the acumen of shipowners, cargo owners and even charterers. If the canal is to defend its position in trade at this fragile period, necessary actions must be taken with bilateral relations heavily considered. Otherwise, the Suez Canal may be “just one of the available options” for those willing to pay higher costs.

 

 

 

 

 

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