Asia/U.S. alternative route via Suez gains support
The all-water route between Asia and the U.S. East Coast via the Suez Canal could become a significant new alternative to the traditional Panama Canal all-water route and the congestion-prone Asia/California route if plans under consideration by ocean carriers materialize.
Rodolphe Saade, chief executive vice president of CMA CGM, said his company may launch its first box service from China to the U.S. East Coast via the Suez Canal in 2006, subject to availability of suitable ships.
“Customers are also looking for more port-to-port options other than inland point intermodal (links),” he said. CMA CGM has no immediate plan to start a Suez service to the United States this peak season, though. “There is a shortage of 5,000-TEU ships now,” Saade explained.
Today, only two container services offer all-water connections between the Far East and the U.S. East Coast via the Suez Canal, despite calls by some shippers that such operations would be supported by the industry. The Grand Alliance runs a South East Asia/U.S. East Coast/Halifax service with ships of about 4,400 TEUs, while the “Round-the-World” service of Norasia, China Shipping, Zim and Gold Star runs from the Far East to the U.S. East Coast via the Indian Subcontinent, the Suez Canal and northern Europe, using smaller vessels.
COSCO and Hanjin Shipping have also been linked to rumors that they may jointly enter the Asia/U.S. East Coast business via Suez, but both carriers have denied having such a plan.
Carriers believe nautical distances make the Suez Canal route competitive for shipments from South China and South East Asia to the United States, while the Panama Canal has an edge for cargoes from more northerly ports in Asia.
CMA CGM’s Saade told a group of reporters in Marseilles Tuesday that its future Asia/U.S. East Coast service via Suez would likely call at ports of South China, one Mediterranean port and three American ports such as New York, Norfolk and Savannah.
For carriers, the cost per slot of an all-water service between Asia and the U.S. East Coast via the Suez Canal would be comparable to that of a service via Panama, he said. To be economical, though, a Suez Canal service must employ vessels of about 5,000 TEUs, rather than smaller, less efficient containerships, Saade added.
“The problem today is (finding) the ships,” Saade cautioned. “Ideally, we’d like to start services via Panama and Suez.”
CMA CGM said it plans to assign to the Asia/North America trade 11 new ships of 5,100 TEUs in 2007-2008 and two vessels of 8,200-TEU capacities in 2006-2007. It did not say whether the 5,100-TEU units will be operating to North America's East or West coasts.
In a separate development, CMA CGM said most shipping lines have added services from Asia to the Pacific Northwest. Last week, Maersk Sealand confirmed it will deploy more capacity on the Asia/Pacific Northwest route and skip calls at Californian ports under a major adjustment of its transpacific services to be implemented at the start of the peak season.
“Los Angeles is becoming a bottleneck,” Saade said, predicting no improvement at Californian ports this year when compared to last year’s severe West Coast gridlock. But he reported that intermodal capacity from Vancouver in Canada’s Pacific Northwest is also already stretched, without the heavy volumes of the peak season.
Amid increasing signs that transpacific shipping routes are being restructured because of medium-term port capacity constraints, Saade added that his company has looked at the potential use of a future Mexican West Coast intermodal hub to serve U.S. shippers. But he warned: “Most of our customers are not comfortable using the Mexican rail network ' because it is not reliable.”
Hong Kong-based Hutchison Port Holdings and Oakland-based Marine Terminals Corp., two major container operators, are studying the feasibility of operating a new Mexican West Coast terminal.