Executive Briefings

How Bad Would It Be Were Political Strife to Close the Suez Canal?

All eyes are watching the deteriorating political situation in Egypt. The recent civil riots in Port Said were, arguably, too close for comfort for those dependent on the Suez Canal. Although the arterial trade route is unlikely to close, the possibility cannot be ignored.

According to Drewry's calculations, there is enough spare vessel capacity to absorb most of the shock of sailing from the Far East to Europe via the Cape of Good Hope simply by increasing vessel speeds, which means that closure of the Suez Canal tomorrow would not be a train smash.

Supply chain managers in Europe responsible for ensuring the smooth flow of goods after a catastrophic failure will be watching the escalating civil violence in Egypt closely, nevertheless. The protests, particularly around Port Said, which culminated in the police going on strike, were an ominous sign.

To help put the importance of the Suez Canal into perspective, its two-way trade between the Far East and Europe accounted for approximately 20.1 million TEUs last year, compared to 5.2 million TEUs between the Indian Subcontinent/Middle East and Europe, and 688,000 TEUs between Australasia/Oceania and Europe.

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According to Drewry's calculations, there is enough spare vessel capacity to absorb most of the shock of sailing from the Far East to Europe via the Cape of Good Hope simply by increasing vessel speeds, which means that closure of the Suez Canal tomorrow would not be a train smash.

Supply chain managers in Europe responsible for ensuring the smooth flow of goods after a catastrophic failure will be watching the escalating civil violence in Egypt closely, nevertheless. The protests, particularly around Port Said, which culminated in the police going on strike, were an ominous sign.

To help put the importance of the Suez Canal into perspective, its two-way trade between the Far East and Europe accounted for approximately 20.1 million TEUs last year, compared to 5.2 million TEUs between the Indian Subcontinent/Middle East and Europe, and 688,000 TEUs between Australasia/Oceania and Europe.

Read Full Article