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Sunday, July 15 2018 @ 09:14 PM EDT

Suez crisis could divert traffic to Panama route

Canal Daily OperationBy Franklin Castrellón - A failed attempt to blow up a container ship in the Suez Canal on August 31, allegedly by activists of the Muslim Brotherhood, has raised fears among maritime industry users of that route, and has opened the possibility that some companies will prefer to use other alternatives, including the Panama Canal.

The attack occurred when activists hidden in bushland on the banks of the Sinai Peninsula, armed with bazookas, fired two shots at the Cosco Asia, of Panamanian flag, with a capacity of 10,062 containers, while in transit, reported the BBC. The ship was not damaged or its crew injured.

After a brief interruption, Suez traffic returned to normal on September 1, when it had scheduled 51 transits.

Egyptian General Command Authorities announced that they had taken extreme security measures on the Canal route, as well as on its approaches and inlets. Although not directly linked to that act, the Egyptian government announced it had arrested a militant terrorist at Sinai. According to the AP, this individual is suspected of involvement in an ambush in which 25 off duty policemen were killed.

The Suez Canal, like that of Panama, is a key artery of world trade. “The role of the Suez Canal in an increasingly globalized economy is huge,” said John Higginbotham, an analyst of the Journal of Commerce, following the incident.

“About 17,000 ships transited the canal in 2012, and its annual tonnage, especially of large container ships has doubled in the past twelve years despite the great recession,” he added. Its revenues total about $5,000 million annually.

A blockade of Suez would be traumatic, the JOC analyst said. Its greatest effect would be to disrupt trade in goods and energy products (oil and gas) between Western Europe and the Persian Gulf states, South Asia and the industrial superpowers of East Asia. It would also do significant harm to US trade with the European Union and Asia.

The alternatives, in a Suez shutdown, would the long journey around the Cape of Good Hope, the Russian Northern route, the Trans-Siberian system, new pipelines and the Panama Canal.

The Suez Canal and the intermodal system in the United States are the main competitors of the Panama Canal for world trade. The advantage of Suez and the intermodal system on the Panama Canal is that both allow the transit of huge post-Panamax ships, which today can not use the Panama route.

Both canals have captive routes. In the case of Suez are the trade of Persian Gulf oil and containerized cargo between Southeast Asia and Europe. In the case of Panama, it serves the grain trade between New Orleans and Asia, as well as serving transport between the West Coast of South America and the East Coast of the United States.

But there is a huge trade between North East Asia (China) and the East Coast of the United States that has the option of choosing between Suez, the intermodal system and the Panama Canal. In this trade, the Panama route offers less time and cost than that of Suez, but today it is limited by the size of the existing locks. This limitation will be resolved when the expanded Canal begins operation in mid- 2015. (thebulletinpanama.com)

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