Impact of the New Suez Canal on North America

Suez Canal Global Conference (Challenges & Opportunities)
22-24 Feb. 2016 - JW Marriott, Cairo, Egypt
By Hazem Ghonima HFCILT
President, TAF Consultants®
Ottawa, Canada
Fairmont, The Queen Elizabeth
Montreal
May 11, 2016
IMPACT OF THE NEW SUEZ CANAL
ON NORTH AMERICA
IMPACT OF THE NEW SUEZ CANAL
ON NORTH AMERICA

2016/1/17 2
THE NEW SUEZ CANAL
193 km
In lenth

Ballah Bypass
10 km
Great Bitter Lakes Bypasses
27 km
New Channel 35 km
Exiting Channel
Dredging New Channel (35 Km) From km 60 to km 95
Deepening and widening the two Bypasses for a total of 37 km
to accommodate ships with draft 66 Ft /24 m. Total length of the project is 72 Km.
This first stage of the project started August 4th, 2014 and was implemented and open to the
navigation in August 6th, 2015
THE NEW SUEZ CANAL PROJECT
Source: Suez Canal Authority.

22-24 Feb. 2016 - JW Marriott, Cairo, EgyptTHE NEW SUEZ CANAL
The Suez Canal can handle 100% of the present world container fleet (on May 11, 2015 MSC Oscar, the world largest container vessel with 19,
2440 TEUs (200,000 tons) moved through the Suez Canal) 97% of Bulk fleet and 63% of Tanker fleet.

5
• Strategically located, connecting the Mediterranean and the Red Sea
• No locks, navigation goes day and night
• At a draft of 66 feet & up to 240,000 DWT, presently can handle ULCV of 18,000 + TEU
• Vessel of 66 feet Transit freely in two directions at the same time compared to 8 before NSC
• Capacity increased to 97 vessels per day from 49 per day
• Two traffic convoys instead of three
• Voyage time reduced to 11 hours from 18 hours
• Waiting time on the Great Bitter Lakes was cut down to 3 hours from to 8-11 hours
• Flexibility of adjusting Toll levels according to supply/demand conditions
SUEZ STRATEGIC ADVANTAGE

Source: Based on data from the Suez Canal Authority.
TRADE FLOWS
Percent
Share
Europe-Far East 77.8
Europe-South Asia 7.60
Europe-Australasia 0.87
Europe-Middle - East 0.05
North America AC - Far East 9.97
North America AC- South Asia 3.13
South America – Middle East 0.29
All Other 0.30
SUEZ CANAL MAJOR ROUTES/MARKETS SHARE
FOR CONTAINER TRAFFIC

2016/1/17 7
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
A
P
C
Panama Suez Seaway
Suez MPC 2000-2015 = + 24.2% in 2003
0
100
200
300
400
500
600
700
800
900
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
M
t
Panama Suez Seaway
283 Mt
33 Mt
-
Suez LPC 2000-2015 = -24.8% in 2009
823 Mt
THE SUEZ CANAL TRAFFIC DEVELOPMENT
1995-2015
Source: Calculated based on data from the Panama Canal, the Suez Canal and the Seaway.

2016/1/17 8
FACTORS EFFECTING THE SUEZ CANAL TRAFFIC
Traffic moving through the NSC is influenced by the interaction of several demand
and supply factors on the Global and regional levels including :
• Geographical Location
• World and regional economic output: Gross Domestic Product (GDP)
• World Merchandize trade and Seaborne trade
• Crude Oil Prices.
• Capacity of the Suez Canal and its Toll Levels
• Evolution of vessel size
• Availability of transshipments, Logistics and Service facilities
• Competitiveness with alternative transportation systems
• Strategic Alliances and Projects.

2016/1/17 9
-30.0
-20.0
-10.0
0.0
10.0
20.0
30.0
A
P
C
World EU North America
Asia NA-ME SC Cargo Traffic
WORLD & WORLD REGIONS ECONOMIES
-30
-20
-10
0
10
20
30
A
P
C
World GDP World Trade
World Container SC Cargo Traffic
WORLD TRADE & CONTAINER THROUGHPUT
IMPACT OF THE WORLD ECONOMY & TRADE
ON THE SUEZ CANAL TRAFFIC
SC Cargo traffic in 2015 increased from 2014 by 0.1% to 823 Mt &
Vessel traffic grew by 1.95% to 17, 483.

2016/1/17 10
-60.0
-40.0
-20.0
0.0
20.0
40.0
60.0
80.0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
A
P
C
Crude Oil Prices SC Cargo Traffic
SC Vessel Traffic
IMPACT OF CRUDE OIL PRICES
ON THE SUEZ CANAL TRAFFIC
Despite huge decline in crude oil prices SC Cargo traffic in 2015 increased by 0.1% to 823 Mt &
Vessel traffic grew by 1.95% to 17, 483.
$151.7
June 2008
37.2
Dec. 2915.
Note: (WTI) historical monthly crude oil prices
dollar per barrel adjusted for inflation.
Source: MACROTRENDS
Source: Based on SCA and U.S. Energy Information Administration (EIA).

2016/1/17 11
5.3 5.1 5.3
5.7
5.9 6.1 6.1
6.5
7.4
7.7
7.4 7.5
6.9 6.8 6.6
6.3
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
A
V
E
R
A
G
E
$
/
T
o
n
n
e
Suez Canal Tolls Linear (Suez Canal Tolls)
SUEZ CANAL TOLLS DEVELOPMENT

EVOLUTION OF CONTAINER VESSELS
Source: Suez Canal Authority, SCZone.
Increasing demand and competitions for containerize cargo necessitated the continual evolution of container vessels
in terms of capacity increases (economy of scale), energy efficiency, decreases of CO2 emissions per container,
contributing to a significant slot cost advantage compared to the present fleet.

22-24 Feb. 2016 - JW Marriott, Cairo, EgyptTHE NEW SUEZ CANAL ZONE (SCZone)
Source: SCZone.
The” (SCZone) is an
international industrial and
logistics hub of 76,000 sq. km
around the canal to attract
more ships . Expected to
generate US$100 billion by
2030.
The container transshipment
facilities at the Port of East Port
Said reduce the Distance
Deviation from the Main
Maritime Route between East
Port Said and Gibraltar to 0.
Consequently, the costs for
large container vessels moving
between Asia-Europe/NAAC via
the NSC will be more
competitive.
Source: Suez Canal Authority.
The New Suez
Canal Zone
SCZone

2016/1/17 14
Ain Sukhna Ter.
SUMED pipeline
Sidi Kerir Ter
EGYPT-SAUDI ARABIA BRIDGE & CAUSEWAY PROJECT
BRIDGE
Saudi Arabia
Lalandbridge
Project
SCZone

22-24 Feb. 2016 - JW Marriott, Cairo, EgyptALTERNATIVE ROUTES & MODES
The Cape of Good Hope - South Africa: Takes all ULCC (Ultra Large Crude Carrier) from which needs a depth
of 25 to 28 meters. unloads the oil into the Sumed Pipeline and
takes it back at the Sidi Kerir Port.
The Panama Canal – Panama: After June 2016 should be able to compete with NSC
for vessels up to 12,600 TEU going to USEC.
The U.S. Intermodal System – USA: Should lose traffic to Panama Canal after
Jnel 2016, and to a lesser degree to the NSC.
The Nicaragua Canal – Nicaragua: 2020-22: If implemented will handle vessel of
23,000 TEU. Should attract most the NSC traffic
moving to North America.
The Northern Sea Route (NSR) – Russia: After 2035-45 could start competing with
the NSC For N-European-N-Asian traffic.
Med-Red Railway Line –Israel: 2020: The 350-km Med-Red railway line between the port
of Eilat on the Red Sea and Ashdod on the Mediter .
could attract 0.4% of the NSC container traffic
The New Maritime Silk Road – China – Plan: When Implemented should greatly benefit the NSC.
The Thai Canal – Thailand – Plan: If implemented will save 3 days of NSC transit-time.

0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Mt
SC NSC
The NSC Tolls should not exceed 4.80 US$/tonne. Vessel
transit should Av.97 vessels/day compared to the average
49 vessels/day in 2014.
Changes (+/-) in one
or more of these
assumptions during
the forecast period
could defer or alter
the forecast findings.
Source: Forecast by TAF Consultants, August 2015.
The NSC potential
cargo traffic is
expected to grow by
an AAPC of 9.6%
during the 2016-2030
forecast period to
reach the MAX. level of
3,624 million tonnes
(Mt) by 2030
compared to an AAPC
of 5.1% and 1,816 Mt
before the expansion
of the Suez Canal.
NSC cargo traffic Share
of the WOSBT, which
was 8.1% in 2014,
should reach 12.1 %
by the end of forecast
period
THE NEW SUEZ CANAL
POTENTIAL TRAFFIC 2016-2030

THE NEW SUEZ CANAL POTENTIAL CARGO TRAFFIC FORECAST
BY MAJOR CARGO GROUP, 2016-2030
0
500
1,000
1,500
2,000
2,500
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Mt
Crude Oil & Products Cereals & Agricul. Products
Fertilizers & Chemicals Fab. Metals
Coal & Coke Machinery & Parts
Ores & Metals Containerized Cargo
Source: Forecast by TAF Consultants.
Potential Container
traffic will grow by an
AAPC of 9.8% to reach
the max. of 2,000 Mt
(eq. to 192.1 MTEU)
by 2030 representing
55 % of the total NSC
Cargo traffic.
During the 1999-2014
this traffic grew by 9%
and by 10.6% when
2009 is excluded . The
share of the NSC
container traffic of the
World container traffic
should average 8.1%
during the forecast
period compared to
6.3% during the
2000-2014 period.

THE NORTH AMERICAN CHALLENGE
• Insufficient investment in transportation infrastructure behind ports contributes
to chronic congestion and lagging port productivity in the U.S.
• At present, no port on the North American East Coast (NAEC) is able to
accommodate the next generation of Ultra Large Container Vessels (ULCV’s
18000+TEU). Yet, these large ships are critical to the industry
• Most of NAEC Ports are scrambling to deepen their harbors to be ready to
handle post-Panamax ships - 12,600 TEU / 14,000 TEU vessels.
IMPACT ON NORTH AMERICA

THE SHIFT
Despite the NAEC constraints, trend of container trade is shifting in its favors due to:
• Most of the U.S consumer market lies east of the Mississippi.
• The Suez and Panama Canals are two additional factors driving this structural
shift.
This trend is expected to accelerate during the next few years due to:
• Expansion of the Suez Canal and the Panama canal
• The move in Asia’s manufacturing base to southern China and the
Pearl River Delta (PRD)
• The New Free Trade Agreements with Asia and Europe.

NORTH AMERICA FUTURE CONTAINER TEU THROUPUT
North America (U.S.
& Canada) TEU
throughput should grow by
AAPC’s of 4.1% from 50
(44.3-5.4) MTEUs to 106
(94-12) MTEUs espectively
in 2030.
NAAC & NAPC container
TEU traffic should increase
during the forecast period
by an AAPC of 4.0% and
4.3% respectively to 43.0
MTEU and 56.7 MTEU.
Source: Forecast by TAF Consultants.

0.0
10.0
20.0
30.0
40.0
50.0
60.0
%
S
H
A
R
E
U.S. East Cost U.S. Pacific Coast U.S Gulf All Other
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
M
I
L
L
I
O
N
S
T
E
U
U.S. East Coast U.S. Pacific Coast U.S Gulf All Other U.S.A.
Source: Estimated by TAF Consultants based on data from U.S. Maritime Administration, MARAD.
Note: Exports and Imports TEU Loaded.
DEVELOPMENT OF U.S. CONTAINER TRADE
• The share of USEC increased from 40.2% in 2006 to 44.8% in 2014 while the U.S. Pacific Coast declined
from 52.4% in 2006 to 46.9%.
• The Port of New York/New Jersey was the largest USEC container port handling 4.3 MTEU in 2014 . Only the U.S.
Pacific Coast ports of Los Angeles and Long Beach were larger.

22
NORTH AMERICA FUTURE VESSEL DEPLOYMENT
Three main East-West arteries dominate global shipping, of which two touch North America:
1) Far East (FEA) to/from North America 2) Europe (EUR) to/from North America 3) Far East to/from Europe
The two North America trade lanes can be served in dual ways (known as Pendulum services):
FEA to NAEC – either eastbound through Panama or westbound through Suez
EUR to NAWC – either westbound through Panama or eastbound through Suez
Europe (NEUR + MED) – NAEC via the Atlantic Ocean
Future deployment through Europe will be as minimum 12,500 TEU and lines will seek to deploy
greater bigger vessel classes , but this is not possible given existing NAEC infrastructure limitations
Asia – NAEC through Panama Canal
Future deployment through the Panama canal will be 12,500 TEU and maximum 14,000 TEU, all lines will seek
to deploy maximum but will be restricted and cannot deploy 18,000 +TEU
Asia – NAEC through Suez Canal
The same applies for vessels through the Suez, where the 18,000+TEU vessels can pass through, but as for the
Europe-NAEC trades this cannot be done due NAEC port restrictions.

Future deployment patterns will greatly impact volume flows (1)
Given current infrastructure and liner networks, an est. 85% of US cargo crosses Pacific and only
15% is routed via Suez - in total 35% via USEC
Source: Industream
2015 volume flows
65% of US
volume
through
USWC
20% of US volume
through Panama to USEC
15% of US
volume
through
Suez to USEC
85% of US
volume via
Pacific
15% of US
volume via
Suez

40-50% of US
volume
through
USWC
+10% more to
30% of US
volume through
Panama to
USEC
.20-30% of US
volume
through
Suez to USEC
. 70-80% of US
volume via
Pacific
20-30% of US
volume via Suez
Future deployment patterns will greatly impact volume flows (2)
Volumes through USEC will undoubtedly increase, while to what degree depends on infrastructure
opportunities presented - one area (yellow) can swing either way
Source: Industream
Post upgrade future scenario – 2020 onwards volume flows
This will create substantial pressure on NAEC ports - could be facing twice the
trade volume of today in less than 10 years.
The only way to deploy bigger vessels to cover the US East Coast is through a
hub concept.

THE SOLUTION
• A “new build” super hub on the North of NAEC, sheltered, ice free harbor with abundant
land to expand and a harbor deep enough to accommodate ULCV’s (18,000+ TEU) .
• Using automation and best in class operational processes to achieve safe, high
production and quick vessel turn around times. Sydney container terminal, recently
branded as NOVAPORTE , is designed to be the most efficient, automated, lowest cost
and greenest facility in North America.
• Close to the Great Circle route from Europe and the Suez Canal and close to entrance the
St. Lawrence Seaway and the Great Lakes. Two days sailing advantage over New York
and Montreal, as well as a three day advantage over Norfolk.
• Access to road systems and double stack rail
• This potential Suez-Sydney container trade development will be of great benefit to both
the Port of Sydney and the NSC .
THE PORT OF SYDNEY –
NEW SUEZ CANAL STRATEGIC OPTION

1st stop on the Great Circle Route from Europe and Suez

Shifting the Geographical line for the fastest all-water deployment
From Singapore to China’s Pearl River Delta (PRD)
Container transshipments facilities at the Port of East Port Said will reduces the
Distance Deviation from the Main Maritime Route between East Port Said and
Gibraltar to 0. Consequently, the costs for container vessels moving/transshipped
from PRD via the NSC to Sydney will be more competitive.

Dredged to 16.5+ Metres
• Funding is in hand, maritime partners are on board, all permits
and approvals are completed and negotiations with shipping
partners underway.

• Highly Automated
• Dredged to 16.5 Metres
NOVAPORTE
• Can Accommodate ULCV’s
• Throughput of 3 Million TEU
• In Excess of 2000 Acres

Transshipment and Intermodal

Access to the Crucial North American Rail Network
Sydney, NSv

0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2 2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
MTEU
1.17 MTEU eq. 9.6 Mt
1.89 MTEU eq. to 15.5 Mt
Source: Forecast by TAF Consultants, August, 2015.
CHINA-ATLANTIC CANADA POTENTIAL CONTAINER TEU TRAFFIC VIA THE
NEW SUEZ CANAL 2016-2030.

CHINA- PORT OF SYDNEY POTENTIAL CONTAINER TEU TRAFFIC VIA
THE NEW SUEZ CANAL, 2016-2030
NAEC–China container TEU trade is
expected to grow by an AAPC of
5.4% during the forecast period
form an estimated 6.2 MTEU in
2014 to 14.3 MTEU in 2030.
Potential development of China-
Sydney container TEU traffic via the
NSC could reach at least 1.89
MTEU (eq. 15.5 Mt) by 2030.
Imports and exports are estimated
to be 1.05 MTEU and 0.84 MTEU
respectively.
This forecast is subject to the
availability of superior container
transshipment port facilities, water
depth, rail infrastructure,
unrestricted terminal capacity to
efficiently handle large container
vessel of 18,000 TEU.
0
2
4
6
8
10
12
14
16
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
MTEU
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
MTEU
China-NAAC China-Sydney Canada-Via NSC
Source: Forecast by TAF Consultants, August 2015.

Impact of the New Suez Canal on North America

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