Suez Canal Authority set to offer discounts to undercut Panama
The Suez Canal, one of the world's busiest cargo waterways, plans to offer transit-fee discounts to divert Asia-to-U.S. Pacific Ocean trade to the Atlantic via the passage, in an effort to boost trade before chief rival the Panama Canal completes its expansion.
The concessions, according to Bloomberg News, are set to be offered by Suez officials at the Trans-Pacific Maritime Conference to be held March 5-6 in Long Beach, according to Sayed Zakaria, director of the transit department at the Suez Canal Authority. He declined to say how much the rate reductions would be.
The Asia-to U.S.-market is the largest U.S. trade lane, and as much as 80 percent of U.S. imports from Asia pass through West Coast ports. The two canals are hoping that the fear of congestion at West Coast ports, and rising rail costs will prompt shipping companies to turn away from the overland 'landbridge' option to East Coast markets and turn to an all-water service, through either the Panama or Suez canals.
Linking the Mediterranean to the Red Sea, the Suez Canal is a two-way passage set at sea level. Unlike the vessel size-restricting lock system that the Panama Canal must rely on because of sea-level differences, the Suez provides an unfettered passageway for vessels, resulting in larger vessel transits.
Voters in Panama approved a $5.3 billion plan in October that will double the Panama Canal's capacity. The Suez Canal, however, already handles 20 percent more ships than its Latin American rival. As many as 18,664 vessels crossed the Suez last year.
Suez Canal Authority set to offer discounts to undercut Panama
