As the expansion of the Panama Canal nears completion, Egypt's own expansion of the New Suez Canal will double its capacity by the end of August 2015. The timetable for the US$4 billion project, set by Egypt’s President Abdel Fattah al-Sisi, is ambitious and promises a much needed boost to Egypt's economy.
While it would be easy to assume that it was the Panama Canal expansion which prompted Egypt’s investment (and it is likely that this did play at least some role as the two canals jostle for potential crossover traffic), reports widely note that it is more likely the case that Egypt’s hand was forced by a need to drive up government revenues. In the wake of the ouster of former President Hosni Mubarak in 2011, Egypt has been rocked in political turmoil. This has severely affected the country’s economy, reducing revenues especially in areas like tourism, and causing public services to reach abysmal levels.
Like Panama, Egypt has projected that the expansion and opening of the New Suez Canal, as it is being called, will more than double annual revenues from the canal by 2023 – from $5 billion (€4 billion or £3.2 billion) to $13.5 billion (€10.9 billion or £8.6 billion) according to a report by Reuters.
Recent reports from the Egyptian government assert that significant progress has already been achieved. After 125 days of work, they have dug 150 million cubic meters of the New Suez Canal. Major General Kamel el-Wazir, the chief of staff of the Army Engineering Authority, told news media that there are 22,000 workers on site, including engineers, technicians and divers.
If the New Suez Canal is indeed completed on time, it will see the waterway widened, allowing for dual passage of ships for longer stretches. Officials say this will lead to greater efficiency, with wait times reduced from half a day, to a mere three hours. The number of passing ships daily is expected to almost double.
Given that currently around 8 percent of the world’s traded goods pass through the Suez Canal, this expansion could boost that number up to around 16 percent, or more, as larger ships are able to move through the Red Sea on their way to Europe’s ports. Whether that will actually happen is another question entirely.
The first canal with global implications
A little over 100 miles (160km) of low-lying, mostly arid land has, throughout most of human history, blocked the Red Sea from the Mediterranean Sea. This relatively negligible distance has infuriated and thwarted commercially-minded civilizations for centuries.
Several Egyptian pharoahs dug canals to link the Red Sea with the Nile River, though these were no longer navigable by the time Cleopatra took to the stage. Likewise, the merchants of Venice conceived of a canal around 1500 after losing their central role as intermediaries in trade with India. Napoleon Bonaparte was famously obsessed with finding the remnants of the passageways built by the pharoahs, sending out teams of archaeologists and scientists to scour the desert around 1800.
Despite the centuries of thought, energy and lost sleep that went into the conception of the canal, it wasn’t until the 1850s that any forward momentum really picked up. Prior to this, there were a variety of favorable studies on the subject, with learned societies dedicated to studying the feasibility of a prospective canal.
But it wasn’t until December of 1858 that the Suez Canal Company was officially created, with work beginning in April of 1859. The construction lasted a decade, with more than 1 million laborers involved. The canal officially opened on 17 November 1869, and the Suez Canal Company was granted concessions to run the canal for the first 99 years of its existence.
Tumult and growth
The canal has undergone several enlargements over the course of its nearly 150-year history. In its current state, the canal is 120 miles (193km) long, 79-ft. (24m) deep, and 673-ft. (205m) wide. The canal is too narrow to allow for two-way traffic, though two bypasses exist along the way – the Ballah Bypass and the Great Bitter Lake.
The entire waterway is open – no locks exist – so beginning in 1869, seawater began to flow freely between the Mediterranean Sea and the Red Sea for the first time.
Currently between 45 and 50 ships can pass through the canal per day, usually in three convoys.
Due to bridges and powerlines, there is an air-draft restriction for Suezmax ships of 68m (223-ft.). Additionally, there is a maximum beam of 50m (164-ft.) and draft of 20.1m (66-ft.); or a beam of 77.5m (254-ft.) and a draft of 12.2m (40-ft.). There is no limit to a ship’s length.
Suezmax ships can carry up to 18,000 TEUs (Twenty-foot Equivalent Units). Compare that with Panamax ships which can carry a maximum of 5,000 TEUs, and post-Panamax which will allow for up to 13,000 TEUs.
At this point, it may be important to understand how vital the Suez Canal already is by throwing out some figures. For example, around 80 percent of U.S. container imports from the Indian Subcontinent pass through the Suez Canal, according to a study by the U.S. Department of Transportation. Annually, nearly 930 million tons of goods pass through the Suez Canal, as does much of Europe’s oil. According to The Guardian, around 2.4 million barrels of oil pass through the Suez each day, which accounts for around 5.5 percent of the world’s total output.
In short, the canal is integral to world trade. It shortens the route between India and Europe by more than 4,000 nautical miles (7,000km). Any disruptions are cause for significant concern within the financial world. The one drawback has been the canal’s location, being situated in one of the most tumultuous regions in the world. Besides the Arab-Israeli Wars, the past decade, and the past several years in particular, have placed its security under heavy scrutiny.
Firstly, there was the increased risk of piracy off the coast of Somalia. Then the Arab Spring came and unleashed its share of uncertainty on the canal’s operations – with Port Said acting as a hotbed of unrest in March 2013.
In some ways, this project could be looked at as an attempt by Egypt to restore trust within the international community. In every sense, Egypt’s decision to expand the canal could be viewed as a positive referendum within the country.
As Suezmax ships are already significant in size, the calls for expansion have been noticeably different from those in Panama. Instead of the need to accomodate larger vessels, the issue is capacity and the need for two-way traffic.
The public support and enthusiasm for the project has been immense. Expansion and longer term upgrades will cost an estimated $8.4 billion (€6.7 billion or £5.3 billion) and when Egypt asked its citizens and corporations to invest in development bonds to finance the project, the target was reached in just six working days.
“It is like we built the pyramids and we built the Suez Canal, something that will be there for all time,” one Cairo resident told NBC News, upon making a personal investment in the canal bonds.
The canal’s future
The project calls for 35km (22 miles) of dry digging and 37km (23 miles) of expansion and deepening to create a 'dual carriageway' where ships can pass more easily, according to Hellenistic Shipping News.
The idea is to allow for upwards of 100 ships to pass through the canal each day – nearly a twofold increase on current levels.
“In order to complete this work within one year it was necessary to make use of huge dredging machines, international dredging machines, because the amount of wet dredging is very large,” the head of the Suez Canal Authority, Lieutenant General Mohab Memish told Reuters. Egypt’s Army will coordinate work with six international firms from the United Arab Emirates, the Netherlands, Belgium and the United States.
The much-hastened timeline has been largely credited to President al-Sisi, who is acutely aware that Egypt needs an economic boost. He is quoted in The New York Times as saying, “We are racing time, because we are very late.”
In addition, Egypt plans to develop 76,000 square km (29,000 square ft.) along the new stretch as an industrial and logistics hub, in which Russia has already expressed interest.
However, while Egyptians are feeling increasingly bullish about the prospects for the New Suez Canal, there are possible snags. The Panama Canal’s expansion means that carriers will be able to cross the Central American isthmus with larger loads, and this could lead some companies to alter routes. And although the Suez Canal can already handle large ships, the trend within commercial shipping is to go bigger and bigger.
Already Maersk Line has ordered twenty new 18,000 TEU vessels, which is the current limit of the Suez Canal, and competitors are likely to follow.
Add to this the possibility of climate change and the melting of the icecaps potentially freeing up an Arctic Sea Route between Asia and the U.S. East Coast and Europe, and the future of global shipping appears set for change.
Panama Digs Deep: The Troubled Progress of the Canal Expansion