Suez extends rate reduction in advance of Panama Canal opening

The Suez Canal Authority has begun granting a 65 percent discount on tolls for all containerships sailing from East Coast North America ports south of Norfolk to Asian ports and 45 percent reduction from Port of Norfolk and north.    The Suez Canal Authority (SCA) is extending discounts on regular toll rates in advance of the opening of the newly expanded Panama Canal later this month.
   Upon opening for commercial vessel traffic June 27, the Panama Canal will be able to accommodate ships with up to 13,000 TEUs in capacity, more than double the previous limit of just 5,000 TEUs. Officials with the Panama Canal expect to win ocean carrier business away from the Suez and other longer routes, especially in the trade between Asia and the United States East Coast.
   The Suez Canal has, effective June 6, begun granting a 65 percent discount on tolls for all containerships sailing from East Coast North America ports south of Norfolk to all Asian ports from Port Kelang east, according to the latest toll circular from the SCA. The authority is also giving a 45 percent rate reduction to ships sailing from Port of Norfolk and ports to the north to the same Asian destinations.
   In addition, vessels originating from the Port of Colombo and east, up to Port Kelang, will receive a 55 percent toll reduction from normal Suez Canal tolls.
   The SCA noted the toll reduction program will be in place on an experimental basis for 90 days, ending Sept. 3, 2016, at which time the authority will decide whether to continue offering the lower rates.
   The discounts also come at a time when some carriers have been experimenting with routing vessels around the Cape of Good Hope at the southernmost tip of Africa in order to avoid tolls at either the Panama or Suez canals. A steep drop in global crude oil prices has made the longer, and previously more expensive, route more economically viable given the low cost of bunker fuel.
   French ocean carrier CMA CGM, for example, in March revised its Pacific Express 3 (PEX 3) around-the-world service, routing vessels around the cape en route from U.S. Gulf and Southeast ports back to Asia.
   The PEX3 is operated with 11 vessels with an average capacity of 5,065 TEUs, according to ocean carrier schedule and capacity database BlueWater Reporting. The service has a current port rotation of Singapore, Hong Kong, Chiwan, Shanghai, Ningbo, Busan, Manzanillo (PA), Houston, Mobile, Miami, Jacksonville, Durban and Singapore.