I think what was clearly evident with the blockage of the Suez Canal in March was how much the world of shipping relies on it. There has been no real competition so the Egyptians have done exactly how they please. This is a massive earner for the Egyptian economy ad you would have thought they would take more care. First of all by widening and deepening the canal so there are no more groundings. This is a business only an incompetent fool could mess up and they have done a good job of chasing away their customers.
Travelling through the canal is not cheap considering the average tariff paid is in the region of $500 000 for a one way ticket. That is some serious money being dished out for a 13-15 hour trip averaging at a cost of $40 000 per hour. In the past shipping companies just paid, but lately that is not the case and with the oil price having dropped significantly enough many are now going around Africa.
Things are only going to get worse for the greedy Egyptians as Russia is now opening up the Northern Sea Route from Asia to Northern Europe. This will be open for business in 2024 and bidders are already being lined up as service providers. This is sound business sense as the Vostok Oil Project is about to kick start life in the region. Three airfields plus two sea port terminals are being built plus a railway line to help service the route.
Why is this so important you may wonder as this is all about money. It is expected to generate masses amounts of income and provide 2% of Russia's GDP once it is up and running. The Russian Government is paying $10 Billion towards the costs and investors are coughing up the remaining $20 Billion required.
The Dutch shipping giant Maersk Shipping Lines did a teat run in 2018 and even though the route is only 7 500 nautical miles compared to the Suez Canal being 12 500 from Beijing to Rotterdam they had too many expenses back then. A ship was required in the front and back to keep the pack ice away as the route travels through the Artic circle. The new ice breakers being built will solve that problem as they are massive being 50m wide and 300 m long cutting a virtual highway through the ice.
Last month they offered large discounts up until the end of June to try and lure ships back. Ships en route to North America were offered a 75% discount. Ships from Northern Europe were offered 17% and North West Europe 6%. One would have thought that the toll for the Suez Canal should be driven by the oil price so this never happens again. How stupid are they to even allow this to happen?
What happens though when the Northern Sea Route opens up as China has already given it the thumbs up as they have been asking for this for years. The Northern Sea Route will basically end up at the Bering Sea giving Ships heading to North America and especially San Francisco a free pass avoiding the Panama Canal saving them even more money. Then what is the future of the Suez Canal as they will be totally cut off with little to no revenue. Things change and having a monopoly and not looking after it is only your own fault.
