June 22 ------ Despite the persistent reports that many sectors within the overall shipping industry are suffering from the global economic slowdown, traffic at the Suez Canal has remained resilient according to a new market analysis released by BIMCO. Strong increases in the number of transits by oil tankers and dry bulkers helped to offset the declines in container ship transits according to BIMCO. Analyzing data from Leth Agencies and the Suez Canal Authority, the report says that overall transits among the three commercial shipping sectors are up 8 percent in 2020 compared to the prior year. A total of 6,166 ships transited the canal in 2020. The Suez Canal has been working to adapt to changes in the shipping industry seeking to develop strategies to address challenges even before global trade and shipping began to feel the impact of the global pandemic. The growth in the size of ships, and especially container ships, has challenged the operations at the canal contributing to a steady decline in the number of container ship transits. Further, Russia is working to promote its northern route through the Arctic as an alternative and faster route between Asia and Europe. In 2020, as oil prices plummeted some shipping lines chose to reroute their vessels around the Cape of Good Hope to avoid the costly Suez transit fees.
According to BIMCO’s analysis container ship transits peaked in 2011 at over 600 per month, falling to a low of 437 per month in 2016. Responding to the declines in volumes due to the coronavirus’s impact on trade and the lockdowns in China that later spread with the virus around the globe, container ship declined a further 15 percent in 2020. BIMCO forecasts in its analysis that with just 330 container ship transits in May, and continuing declines due to the virus that 2020 may result in the lowest ever annual number of container ship transits of the Suez Canal. “The idle container ship fleet has remained at record-breaking levels through a solid portion of 2020, with container ship transits through the Suez Canal reflecting the widespread blank sailings, dropping 32% year-on-year in May,” says BIMCO’s Chief Shipping Analyst, Peter Sand. “Container carriers are stuck between a rock and a hard place, where high container spot freight rates must be sustained by massively restricting capacity on the market. Escaping this requires a substantial pick-up in demand.”
The Suez Canal offset the strong declines in container ship transits with record numbers of oil tanker transits driven in part by the increased demand resulting in a reshuffling of the oil market responding to the IMO 2020 sulfur cap and the sudden decline in oil prices that likely increased fleet productivity. Transits by oil tankers rose to an all-time high of 485 through the canal in May with product tankers accounting for approximately three-quarters of the traffic. Equally impressive were the strong gains in the number of transits from dry bulk ships, which were up over 40 percent in 2020. Over 2,000 dry bulkers transited the Suez Canal in the first five months this year with over just half falling in the Panamax category.
BIMCO notes that it is somewhat puzzled by the increase in dry bulker transits speculating that it could reflect rebates extended to dry bulkers and the IMO 2020 sulfur cap which may have encouraged shorter sailing distances to save on bunkering costs. The analysis concludes that as the global economy recovers from the shock of COVID-19 and without new protectionist efforts, shipping and the Suez Canal will benefit from a recovery in part driven by demand from the developing nations in Asia. The fundamental challenges resulting from the changes in the shipping industry and the potential of competing routes however will continue to be issues that can impact the future of the Suez Canal.