Email Facebook Twitter

Exclusive: Hardman & Co call the lithium market: is a change in trend happening?
Tower Resources identify 18 million barrels of contingent reserves worth $118M in Cameroon

ShareCast News

Low oil prices affecting Suez canal

Wed, 24th Feb 2016 14:11

(ShareCast News) - Canals were the latest industry to be affected by the downturn in oil, with new analysis from Port Overview suggesting the Suez was being particularly affected.

Both cellular overcapacity and low bunker fuel costs have led carriers to divert multiple sailings away from the primary arteries and around the southern African cape over the last year, the report shows.

Since the end of October last year, 115 vessels on Asia-US East Coast and Asia-North Europe sailings had made the trip around the Cape of good Hope, rather than through the canals, despite using them on the head-haul legs.

"Normally, 78 of those voyages would have gone through the Suez Canal," the Port Overview report said.

"SeaIntel concludes that both the canals face a significant challenge in the current low bunker price, as it means that for many services it is cheaper to sail south of Africa on the backhaul than to use the canal routings," it added.

The canals had a disadvantage on US East Coast-Asia services in particular, it said, where it was currently economically viable for 14 out of 22 services to sail south of Africa on the back-haul, and would possibly be viable for almost all of them if intermediate ports were deleted.

"Currently, the carriers are only using the south of Africa routing on the back-haul legs and retaining the transit time, but considering the financial situation of most carriers, and keeping in mind the relative 'ease' with which the carriers implemented both slow-steaming and super slow-steaming, going south of Africa on the head-haul is going to look very alluring for some carriers, if indeed they can re-route the cargo from the intermediate port calls."

On top of avoiding canal fees and some of the particularly pirate-infested waters near the canals, the longer route around Good Hope - which added around a week of transit time - had the ability to 'soak up' between 60 and 80 vessels.

Half of those would be ultra-large cellular vessels, removing some of the overcapacity which was plaguing the freight industry.

Back to ShareCast News

Share Price, Share Chat, Stock Market news at
FREE Member Services
- Setup a personalised Watchlist and Virtual Portfolio.
- Gain access to LIVE real-time Regulatory News (RNS).
- View more Trades, Directors' Deals, and Broker Ratings.
Share Price, Share Chat, Stock Market news at

Datafeed and UK data supplied by NBTrader and Digital Look. While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk.
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.