Marisol International Transportation & Logistics Blog

The Panama Canal vs. The Suez Canal

Posted by Chelsea Mitchell on Jul 31, 2015 8:48:28 AM

The Panama Canal and Suez Canal are longtime rivals within the container shipping industry as both canals support the flow of global trade by shortening historical trade routes. Container ships have continued to grow in size and the canals noticed the need for expansion projects in order to keep pace with the industry. The Suez Canal recently finished its expansion project and the Panama Canal expansion project is expected to be completed next spring. Below we compare the two canals' history, expansion projects, individual market share and future. 

History of the Canals 

The original Suez Canal opened almost 150 years ago linking the Mediterranean Sea with the Red Sea. The canal took almost ten years to dredge and was opened for navigation in 1869. Vessels were then able to bypass the long route around the southern tip of Africa by transiting the 101-mile Egyptian waterway.

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On the other side of the world and about ten years later, the French began construction on the Panama Canal. However, engineering problems and diseases caused construction on the canal to cease. In 1904, the United States resumed construction on the canal. While building the canal a total of 5,609 lives were lost due to accidents, malaria or yellow fever. Finally in 1914, the project was complete and the canal was opened connecting the Atlantic and Pacific oceans. 

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Expansion Projects 

The Panama Canal expansion project started in 2007 and is scheduled to be completed during the spring of 2016. A new, third set of locks will create an additional lane to accommodate larger container ships. After the completion of the project, the canal will be able to handle 13,000 TEU capacity vessels, more than two times its current capacity. 

The Suez Canal Authority recognized it would need to compete with the expanding Panama Canal. Therefore, the canal authority announced its plan in August 2014 to deepen the canal and create a new 45-mile parallel lane to enable two-way traffic. Previously, the canal only permitted one-way convoys which created delays for ships moving through the waterway. The expansion is expected to shorten the transit time from eighteen hours to eleven hours. The wait time to transit the canal is also estimated to drop from eleven hours to around three hours. The project was recently completed, and the first container ships transited the expanded portion of the Suez Canal this past weekend (July 25-26).   

Market Share Competition 

Over the last couple of years, carriers shifted freight to the Suez Canal route because it could handle larger vessels. However, another market share shift took place in July of 2015 and the Panama Canal officially recaptured the majority (51%) of traffic on the Far East to U.S. East Coast route. 

According to the Journal of Commerce, the Panama Canal currently supports sixteen service strings with a weekly capacity of 73,000 TEUs and an average ship size of 4,570 TEUs. On the contrary, the Suez Canal handles nine service strings with a weekly capacity of 70,000 TEUs and an average ship size of 7,780 TEUs. 

The Future of the Canals 

At the conclusion of the current Panama Canal expansion, ultra large mega-ships (capacity of 14,501 TEU and higher) will not be able to transit the canal. Therefore, the Panama Canal Authority is contemplating yet another expansion project which would allow the canal to handle vessels as large as 20,000 TEUs. 

Both the Panama Canal and the Suez Canal will likely continue expansion projects into the foreseeable future as mega-vessels continue to be introduced on carrier service strings. The anticipated construction of vessels with capacity of 20,000 TEUs will continue to affect the canals and industry as a whole. Not only will the canals be forced to accommodate the introduction of these ultra large mega-ships but they will also have a significant impact on infrastructure and terminal berthing around the world. 

How are Mega-Vessels Changing the Industry?

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Topics: Suez Canal, Panama Canal

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