Wednesday, October 7, 2015

SUEZ CANAL LOGISTICS HUB VERSUS OMAN



Will the Suez Canal logistics hub be a challenge to the plans Oman has discussed to be a logistics hub?


Port Said Channel Tender Winner to Be Announced This Week

Side channel will allow vessels in the Mediterranean Sea direct access to East Port Said around the clock

People enjoy the water as a container ship crosses the Gulf of Suez toward the Red Sea before entering the Suez Canal, in El Ain El Sokhna in Suez, east of Cairo on Sept. 5, 2015. ENLARGE
People enjoy the water as a container ship crosses the Gulf of Suez toward the Red Sea before entering the Suez Canal, in El Ain El Sokhna in Suez, east of Cairo on Sept. 5, 2015. Photo: Reuters
COPENHAGEN—The Egyptian government will announce this week the consortium that won a tender to build a side channel near the Suez Canal that will allow vessels in the Mediterranean Sea direct access to East Port Said around the clock, the chairman of the Suez Canal Authority said Tuesday.
“We have a winning consortium. The agreement will be signed this week—maybe tomorrow or after-tomorrow—and work will start in two weeks. We are just waiting for the prime minister to sign the agreement,” Mohab Mamish told The Wall Street Journal. “Work will be completed in six to seven months.”
Two consortia, one led by Oak Brook, Ill.-based Great Lakes Dredge & Dock Co. GLDD -3.35 % and the other led by National Marine Dredging Co. of the United Arab Emirates, are in the running for the project. Dredging works are estimated to cost $60 million. Mr. Mamish declined to name the winner.
The East Port Said waterway will be one of the first projects in a planned international industrial and logistics hub to be built around the expanded Suez Canal. The expansion, completed in August after only one year of intensive work, allows two-way traffic on the waterway for the first time, boosting benefits for shipping companies, cargo owners and Egypt’s economy.
When we said the new Suez Canal would be completed in only one year, nobody believed us. But we put 50,000 people working around the clock, and the work was done.
—Mohab Mamish, chairman of the Suez Canal Authority
Recent media reports suggested that the six-mile-long East Said Port waterway was put on hold, but Mr. Mamish said they were unfounded.
“The government is run by military people like myself who are disciplined and deliver what they promise on time,” said Mr. Mamish, a former Egyptian navy admiral. “When we said the new Suez Canal would be completed in only one year, nobody believed us. But we put 50,000 people working around the clock, and the work was done.”
Currently, every vessel that comes through East or West Port Said has to join the Suez Canal convoy, slowing down traffic. The parallel smaller waterway will allow access to East Port Said around the clock instead of the current eight hours a day.
Mr. Mamish said he is confident revenue projections for the expanded Suez Canal will be met. Egypt projects annual revenue from the canal will increase to $13.2 billion in 2023 from $5.3 billion currently and that the number of ships passing through the canal will rise to 97 a day by 2023 from the current 47 a day.
But the canal was hardly hitting capacity even before the expansion, raising questions about how many more ships will follow that route once the new channel opens, according to shipping consultancy Drewry Maritime Advisors. The number of ships passing through the canal has been falling in recent years, a result of tepid trade growth and a drive by container vessels to pack more cargo onto larger ships.
“Trade goes up and down, but our revenue will grow because before the expansion, the one-way traffic created delays and limited our capacity to handle the biggest of ships,” Mr. Mamish said. “Bottlenecks of eight to 11 hours were routine, while now everything runs like clockwork.”
Mr. Mamish added that the eurozone’s anemic economic performance and slower growth is China are “certainly among our top concerns.”
The Suez Canal is the waterway of choice for giant container ships moving Chinese exports to Europe. Container ships move the vast majority of the world’s manufactured goods, and the Asia-to-Europe trade loop is the world’s busiest in terms of capacity.
Special forces have been recently introduced to the Suez Canal, previously guarded by regular army, navy and air-force units, Mr. Mamish said.
“With Islamic State active in the area, we spare no effort to make the waterway as safe as possible,” he said. “We have specific plans to prevent such attacks.”