Turns out oil prices are so low it’s cheaper to sail 9,000km around Africa than cross the newly expanded Suez Canal

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This from the Mail & Guardian:

Essentially, it makes more business sense to sail the longer distance – even though the Suez Canal shortens the Europe Asia trade route by at least 9,000 km – and burn more fuel by increasing speeds.

With oil touching $30 a barrel, a recent analysis by SeaIntel, a maritime monitoring group suggests that if shippers can accept an extra week of transit time by sailing south of Africa, it would save them an average of $17.7 million a year per vessel, in transit fees.

According to the analysts the Suez Canal would need to reduce fees by around 50% – and the Panama Canal which similarly affected by 30% – for crossing to be commercially viable for long-haul ships.

Also:

That’s bad news for Egypt, which spent $8 billion on expanding the Suez Canal, opened with much fanfare last year. The expansion, accomplished in a record one year, was intended to reduce waiting times from 18 hours to 11 hours. Authorities said they expected canal revenues to more than double from the annual $5.5 billion in 2014 to $13 billion by 2023.

On a related note, if you are interested in shipping and global trade be sure to read Marc Levinson’s The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger. I recently picked it up and really like it so far.

H/T Charles Onyango-Obbo

 

fixing somalia

The Kenyan foreign minister has some ideas….

Kenya’s foreign minister said Saturday the millions being spent to fight pirate attacks off the coast of Somalia should be spent instead on helping the country become a functioning state.

Adding that

“Piracy is not born at sea. It’s born on land. And if you are able to patrol and protect your coastline, it’s unlikely that pirates will find a way to the high seas to cause the menace,” Wetangula said. “Instead, what are we seeing? 52 warships patroling … the waters of the Indian Ocean, but piracy is still going on.”

I say it is about time we exorcised the ghosts of black hawk down and meaningfully intervened in Somalia. Such an intervention should be realistic enough to allow al-Shabab those who can monopolize violence to control Mogadishu and surrounding areas in the short term before attempts are made to rebuild a functioning Somali state.

h/t Cyn