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SINCE
the end of October last, SeaIntel Maritime
Analysis showed that 115 vessels deployed
on Asia-USEC and Asia-North Europe services
have made the back-haul sailing south of
Africa instead of through the Suez or Panama.
With
the extra 3.5 days transit time on the back-haul,
carriers could save US$5 million per service
in fuel savings, argues New York's Marine
Link - quite apart from the canal fee savings
of $20 million a year per service.
"Potentially,
we may see carriers offering 'business class'
fast services through the Suez Canal and
economy fare around the south of Africa,"
said SeaIntel CEO Alan Murphy.
If
instead carriers were to route the vessels
through the Suez Canal on the back-haul,
the extra 3.5 days of sailing time would
not add any significant savings on the back-haul
fuel consumption, due to the already low
sailings speeds.
Of
the 115 voyages, three were vessels on Asia-North
Europe, while the rest were deployed on
Asia-USEC. We could also see that there
were plans to switch more Asia-North Europe
sailings to the south of Africa routing
in the coming weeks.
While
the change of routing of some Asia-North
Europe services (back-haul) to south of
Africa is a blow to the Suez Canal, it will
not become critical until we see more back-haul
services being switched and/or the head-haul
routing also is changed.
From
a SeaIntel Sunday Spotlight we analysed
the possibility of carriers switching their
head-haul routing to south of Africa to
avoid the Suez Canal fee.
The
vessels currently using the route south
of Africa on the back-haul have mostly used
this option without increasing transit time
or dropping intermediate calls, eg, in the
Mediterranean or Middle East.
They
have instead accelerated on the back-haul
leg that would otherwise have gone through
the Suez Canal.
"This
is not an option on the head haul, as all
services currently sail so fast on the canal
leg that the extra 3,100 nautical miles
cannot be incorporated without increasing
the transit time between Asia and North
Europe, as most ultra large vessels cannot
sail faster than 21-22 knots.
"We
therefore examined the economic viability
of the south of Africa routing if 3.5 or
seven days were added to the head haul transit
time."
The
extra 3.5-day scenario implies that 3.5
days have also been added to the back-haul
transit time, making it even more likely
that the back-haul voyage will also be switched
to south of Africa.
The
3.5 and seven days scenarios require that
the carriers deploy an extra vessel per
service to keep weekly intervals. Charter
prices vary quite a bit, and no efficient
market currently exists for vessels above
10,000 TEU.
But
brokers with whom we were in contact earlier
normally assume that a vessel costs roughly
US$3.5 nominal TEU per day; this covers
the building costs, OPEX and the necessary
return on invested capital. Thus a 13,000-TEU
vessel roughly costs $45,500 per day.
Of
course, carriers considering the longer
route should be mindful of the potential
loss of business as a result of the longer
transit times.
At
the same time, it should also be remembered
that carriers introduced slow steaming without
much opposition from shippers, who seem
to value lower freight rates over shorter
transits.
The
analysis shows that 12 of the 19 dedicated
Asia-North Europe services could sail south
of Africa on the head-haul if 3.5 days were
added to the transit time.
The
potential savings vary from service to service,
ranging from 7.3 to $19.4 million on annualised
basis, compared to the current routing through
the Suez Canal.
On
top of this, with the extra 3.5 days transit
time on the back-haul carriers could save
$5 million per service in fuel savings,
if the back-haul routing was rerouted to
south of Africa, and this is in addition
to the back-haul canal fee savings of $20
million a year per service.
If
instead carriers were to route the vessels
through the Suez Canal on the back-haul,
the extra 3.5 days of sailing time would
not add any significant savings on the back-haul
fuel consumption, due to the already low
sailings speeds.
If
seven days were added to the transit time
on the head-haul all 19 Asia-North Europe
services would be able to make the routing
south of Africa. On average the carriers
would save $17.2 million per year per service.
Combined, the cash-strapped carriers could
save $275 million per year.
SeaIntel
also notes that an added benefit would be
that both scenarios would soak up 19 ultra-large
container vessels, equalling roughly 270,000
TEU. Such a move would be greatly beneficial
for the carriers, as it would go a long
way towards restoring the supply/demand
balance in the market.
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