The Suez Canal Authority (SCA) has positioned itself as an attractive alternative route for larger cargo vessels traversing the route to southern Asia in recent years. Rate incentives introduced by the SCA have led to a banner year for the waterway in 2018, surpassing many established records to date. When the expanded Panama Canal opened in June 2016, the SCA implemented discounts for container vessels originating from American east coast ports that were bound for ports in southern and eastern Asia, with the rates set to continue until June 30th of this year. This has worked well for larger vessels but smaller vessels still sail the route of the Cape of Good Hope as a more cost-effective measure.
Data gathered in the BlueWater Reporting Capacity Report shows that the incentives offered by the SCA were a factor for some carriers in deterring larger vessels through the Suez Canal rather than the Cape. However, the increase in smaller vessel traffic has greatly benefited the nation of South Africa in spite of the reduction in larger vessel traffic. If the SCA continues in their push towards more rate reductions, it may become more cost effective for smaller vessels to traverse the Suez Canal as well, making for an increasingly competitive market.
We at Nelson, International are working to find the most creative, cost-effective and expedient options for our customer’s cargo. While we’re deeply invested in routine traffic with our partners, we acknowledge that the competition in the market is making more choices for both cost and timing. We are looking forward to utilizing every tool in our box to ensure our clients have the best, fastest cargo move we can provide. Contact your representative today for the options we have to move your cargo.