2014 - Panama Canal Transit - Canal Railroad

The Panama Canal Railway was pulling cars mostly laden with Maersk Line containers.

 

In 2103 there was much media attention to an announcement that Maersk would stop using the Panama Canal and transfer their shipping to the Suez Canal as a cost saving plan. Subsequently they have not cancelled all Panama traffic but it looks like they are using the railroad to lessen the transit cost (oops, assuming too much, like is the railway cheaper?).

 

 

11 MARCH 2013 - BLOOMBERG

 

(Maersk Line, the world’s biggest container shipping company, will stop plying through the Panama Canal to move goods from Asia to the U.S. east coast as bigger ships help the company move it profitably through Suez Canal.

 

Maersk Line will send vessels through Suez Canal that can carry as many as 9,000 20-foot boxes at a time, instead of using two 4,500-box-vessels through Panama Canal, Soeren Skou, chief executive officer of Maersk Line, said in Singapore today. The last sailing through Panama will be on April 7 and the first service through Suez will be a week later, the company said in an e-mail statement.

 

“The economics are much, much better via the Suez Canal simply because you have half the number of ships,” Skou said. “One of the reasons for why this is happening now is that the cost for passing through the Panama Canal has gone up. At the end of the day, it comes down to cost.”

 

Shipping lines, including Maersk Line and Neptune Orient Lines Ltd., have cut costs, reduced speed of their fleet and sold some vessels to contend with freight rates that are below break-even levels. Maersk Line, based in Copenhagen, has said pressure on charges will remain this year.

 

Fees for ships to go through the Panama Canal have tripled in the past five years to $450,000 per passage for a vessel carrying 4,500 containers, Skou said. The distance from China to the U.S. east coast via the Suez Canal is about 4 percent to 5 percent more, he said.

 

A $5.25 billion expansion of Panama Canal, the waterway handling 5 percent of global trade, will open by June 2015, six months later than originally planned. The canal connects the Atlantic and Pacific oceans and is used by as many as 14,000 vessels a year.

 

Whether Maersk will use the Panama Canal after the expansion will depend on the economics, Skou said.

Kyunghee Park, Copyright 2013 Bloomberg.

 

 

22 APRIL 2013 - BUSINESS INSIGHT IN LATIN AMERICA

"Maersk not abandoning Panama, but shifting Asia-US east coast trades to Suez"

 

While global shipping line Maersk is reducing its transits through the Panama Canal, it is not altogether abandoning the route, Ariel Frias, marketing and communications manager for Maersk Central America and Caribbean told BNamericas.

 

"This is a shift in one route on the basis of achieving economies of scale. It doesn't mean that Maersk is abandoning Panama," said Frias.

 

At the beginning of April, Maersk stopped sending Asia-US east coast cargo through the Panama Canal, opting instead to use the Suez Canal.

 

The reason for the switch is "very basic," according to Frias. Maersk can deploy vessels of up to 9,000TEUS along the Suez Canal while the maximum capacity along the Panama Canal is 5000TEUS. As a result, the unit cost to use the Suez Canal is much lower and "this creates significant economies of scale," said Frias.

 

There are many other Maersk services that will continue to be served through the Panama Canal, such as the Oceania service that supplies the Oceania-US east coast route as well as exports from South and Central America to northern Europe and the Mediterranean.

 

In real terms, the switch for the Asia-US east coast route will mean just a 14% decrease in annual Maersk transits across the Panama Canal, said the manager.

 

In 2012, Maersk carried out 533 transits through the Panama Canal, approximately 15% of total containerized trade through the canal.

 

Maersk also accounted for roughly 15% of the canal's total US$960mn revenue for the container segment in 2012, according to the manager.

 

Switching the TP7 vessels (that serve the Asia-US east coast route) to the Suez Canal will mean a drop of just two transits per week (of a current total of 10 or 11) through the Panama Canal.

 

Frias confirmed that Maersk would reassess the route switch once the expanded Panama Canal is operational by June 2015.

 

NOTE: This date will not be met and opening is slated now early to mid 2016. Hmmmmmm!!

 

"The Suez route is 4%-7% longer than the Panama Canal route and so, all things equal, if you can deploy the same vessel size on both routes, the shorter distance through Panama will make it a more attractive option."

 

Fees to pass through the Panama Canal have tripled in the last five years and while Frias confirmed that it "is an important factor in our cost analysis,* the most important reason behind Maersk's switch to the Suez Canal is "the lower unit cost."

 

"We will sail the Suez with 9,000 TEUS until we have a similar alternative with Panama," concluded Frias.

 

 

05 JULY 2104 - SHIPWATCH

"The Panama Canal: Maersk Line will return"

Maersk Line will return to the Panama Canal, partly due to demands from major American customers, says the Canal administration of the important route in an exclusive interview with ShippingWatch.

Done