IHS Martime: Arctic North Sea Passage vs Suez

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  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03
  • 09/04/13 09:03

Transcript

  • 1. IHS Maritime: Research Note Arctic North Sea Passage not yet an alternative to Suez Gary Li, Senior Analyst, IHS Maritime +86 10 6533 4619 | Gary.Li@ihs.com Released on: 03 Sept 2013
  • 2. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 2 Synopsis • IHS Maritime Senior Analyst Gary Li offers commentary on why the current turmoil in Egypt is not likely to destabilize shipping traffic through the Suez Canal and the view that the Arctic North Sea Passage will see an uptick in traffic is premature, despite the recent terrorist attack on a Chinese container ship in the Suez last month. • Gary Li may be reached on +86 10 6533 4619 or email: Gary.Li@ihs.com for additional commentary or if you have questions.
  • 3. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 3 Key Takeaways • Massively premature to suggest that due to turmoil in Egypt, the Arctic North Sea Passage is more viable. • IHS Maritime data shows the number of monthly transits going through the Suez Canal has remained remarkably stable despite turmoil in Egypt and was the highest in July 2013. • IHS Maritime analysis shows that the highest number of transits was made by container ships. • With nearly 10% of its annual revenue stemming from transits, the interests of the Egyptian State are directly tied to the smooth functioning of the canal. • International trade simply cannot not use Suez in the immediate future.
  • 4. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 4 Analysis: Arctic Route not more viable • Some commentators had noted that the recent increase in risks to the Suez Canal might make other trade routes such as the Arctic North Sea Passage more viable. However, with only 296 polar transit permissions granted by the Russian government as of July 2013, with only 55 (18%) applying for the entirety of the passage, and with only 3-5 Russian icebreakers being available for escort, this is massively premature. • Although there has been much concern regarding the turmoil in Egypt, the number of monthly transits going through the canal has remained remarkably stable. July 2013 saw the highest number of transits for the past year (see Table 2). • IHS Maritime data shows that during key points in 2013, such as in January when 50 people were killed in violent street protests, in July when the military removed President Morsi, and in August when hundreds were killed when the army crushed pro-Morsi protestors, transits were never directly affected.
  • 5. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 5 5,000 container ships so far • IHS Maritime analysis shows that the highest number of transits was made by container ships (see Table 3), with some 5,000 vessels and more than 39m TEUs transiting in 2013 up to August (see Table 1). • So far this year, 906 crude oil tankers also passed through the canal, with a total capacity of 150m m3 of crude oil. COSCO alone had 779 transits since 2012, with 500 being container ships with a total capacity of nearly 5m TEU.
  • 6. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 6 Egypt revenue tied to Suez • Despite the increased risks to personnel safety, Suez will almost certainly remain a vital passage for international shipping for the immediate future. And more importantly, the interests of the Egyptian State are directly tied to the smooth functioning of the canal. • With nearly 10% of its annual revenue stemming from transits, the canal will remain as the top security priority for the government.
  • 7. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 7 Ships under fire? • On 31 August, a Chinese container ship COSCO Asia was fired upon by what Egyptian authorities described as ‘terrorists’ as it transited the Suez Canal. The weapons used were allegedly light machineguns and a rocket propelled grenade (RPG). While neither type would have been able to cause much damage to large shipping such as the 10,000TEU, 109,968 dwt COSCO Asia, they nevertheless pose considerable danger to seafarers. • Although this was the first such attack on shipping transiting the Suez since the Egyptian revolution, threats had been issued before by various groups, ranging from striking workers to militants. The Egyptian military has always stated that it would not tolerate any threats towards the functioning of the canal, which has seen 18,000 transits in 2012 and 12,000 so far in 2013 (see graph 2).
  • 8. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 8 Table 1: Suez Total container ship transit Source: IHS Maritime
  • 9. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 9 Table 2: Suez: Total ship transits Source: IHS Maritime
  • 10. © 2013 IHS IHS Highly Confidential; not for disclosure beyond IHS colleagues with a need to know 10 Table 3: Suez Transits (Top 10 ship types) Source: IHS Maritime