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

Screen Shot 2016-03-03 at 9.50.15 AM

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

 

these somali pirates must be stopped now

As I whined about the resignation of Mbeki and the ineluctable ascendance of one Jacob Zuma to the most powerful position on the continent, the story of Somali pirates seizing a ship with militray cargo destined for Kenya made me even more worried. 33 tanks, among other military hardware, were on the Ukranian ship that was hijacked by pirates from Somalia while on international waters off the coast of the failed state in the horn of Africa.

These developments raise a very serious question. For how long will the world sit back and watch as a few greedy men with guns terrorize an entire country, killing innocent women and children and depriving them of a decent livelihood? So far the consensus has been that as long as the mess is confined within Somalia then everyone (save for Ethiopia and the CIA) would pretend that nothing is going on. But now there is an overflow. Tired of the boredom of pillaging within their borders the rag-tag bandits of Somalia have decided to extend their activities to the sea, routinely hijacking ships for ransome and booty. They need to be stopped.

These 21st century pirates need to be stopped not just in the sea but also within the borders of Somalia. It is imperative that countries within the wider East African region come up with a plan of solving Somalia’s problem once and for all instead of merely containing it, as seems to be the policy of the regional military powerhouse Ethiopia and the United States. Somalis are people too – just like the Kenyans or Ivorians who elicited much international sucpport in their times of crises – and need to be allowed to have an existence worthy of human beings. The last eighteen years have shown us that Somalis, on their own, cannot rid themselves of the dystopia that they’ve made of their country. The international community should – in a Rousseauian sense – impose peace and set in motion a more transparent re-education on government and institutions instead of the current puppet government arrangement. Sounds too optimistic to you? To the gainsayers I say it can be done. It can be done because the vast majority of Somalis want it to be done. An international intervention will not be an Iraq, not even a Somalia-’93.

piracy off the somali coast

If you thought piracy belonged to the 19th century, think again. This year alone there have been at least 26 attacks by pirates off the coast of Somalia. The latest incident involves a Japanese ship (the Golden Nori) that had 23 crew and tens of thousands of tons of inflammable benzene.

The pirates are demanding a $ 1 million ransom or else they will kill the crew of the ship.The situation has been further complicated by the fact that according to a 1992 UN resolution establishing an arms embargo, foreign troops are not allowed to enter Somali waters.The UN regulations have made it difficult for the US navy and Kenyan authorities to fully police this region of the Indian ocean and end the piracy.

Keeping Somalia’s lawlessness within its borders has always been tricky. In the past the many fundamentalist thugs running around in the country mainly dealt in illegal arms and smuggled goods across the region but lately they seem have found a new lucrative business – piracy and kidnapping of foreigners for ransom.

As negotiations go on for the release of the hostages it has become apparent that the Somali problem cannot be ignored for long if peace and stability is to be achieved in the horn of Africa. And with the US keen to win the global assault on terror, the last thing it needs is a failed stage occupied by these extremist thugs.