It is an ambitious project with an equally ambitious timetable that could impact global trade patterns for decades to come. The promise of not only upgrading the 145-year-old Suez Canal itself but also the adjacent land could have a transforming effect on the Egyptian economy.
Next to the Pyramids, the Suez Canal might be the most iconic feature of Egypt. And like the Pyramids, the Suez Canal is one of Egypt’s largest contributors of hard currency to the national economy amounting to over $5 billion annually.
Currently, 8%-10% of global sea trade passes through the waterway linking the Mediterranean Sea with the Gulf of Suez, Red Sea, Persian Gulf and ultimately Arabian Sea and Indian Ocean. The Suez Canal transit cuts off a tremendous amount of distance for ships moving from Asia to Europe or the US East Coast, as in the case with container ship routes. For oil tankers moving from the Arabian Gulf to Europe, the Suez shortcut is even more dramatic, reducing the distance by 43% or creating a 14-day trip as opposed to a 24-day voyage. Around 3,500 tankers, 2,900 bulk carriers and 6,000 container ships and 1,000 car carriers compose a majority of the 16,600 ships using the Suez Canal.
The Suez Canal is 119-miles in length with approximately 101-miles of constructed waterway. Unlike the Panama Canal, the Suez Canal has no locks. The channel depth is between 60-66 feet with an air draft [Suez Canal Bridge] of 223-feet and a maximum breath of 254-feet. The ships transit the canal in convoys as much of the waterway isn’t wide enough for two-way traffic.
Suez Canal Corridor Project
Despite the robust traffic, the canal without deepening can’t handle most of the new vessels when loaded to full capacity. Secondly, even though the Suez Canal contributes over $5 billion to the Egyptian state coffers, the overall economic impact pales in comparison to economic impacts by ports with vastly smaller footprints. With this fact in mind, in the 1990s the concept of turning the Suez Canal area into a global economic and logistics hub began to take shape. Dubbed the Suez Canal Corridor Project (SCCP), it would address both the need to deepen and improve the Suez Canal itself while providing the basis to construct value added services to take advantage of the strategic location. Although the plan in its entirety didn’t take hold, the “new” Suez Canal project did with the August 5th (2014) inauguration by Mohab Marish, Chairman of the governing Suez Canal Authority and in the presence of Egyptian President Abdel Fattah el-Sisi.
The canal expansion involves dredging and widening part of the existing network while cutting a new section some 22-miles long. Overall, the entire project is 45-miles in length. When completed the canal will operate two-way traffic, cutting waiting time from 18 hours to 11 hours and capacity from 49 ships to 97 ships per day. The Egyptian government believes that upon completion, canal revenues will more than double (upwards to $13.5 billion by 2023,) and it will provide fertile ground for value added services and ultimately industrial development.
On August 14th President Abdel Fattah el-Sisi announced the Suez Canal Authority would issue “investment certificates” through Egyptian banks to fund the $8.5 billion Suez Canal project. The bonds sold out in just eight days with around 82% of the bonds being purchased by individual Egyptians.
The Egyptian president has set an ambitious timetable for completing the project. The project was expected to take three years and he wants it down within one. The Egyptian armed forces are engaged in the drilling phase and have committed 4,500 pieces of heavy equipment to complete the task within the Sisi’s allotted schedule. The goal is to remove 1 million cubic meters per day in the new canal area. At that clip the canal would be finished in eleven months with a month for trial runs.
Building fast is always a dangerous course. Cost overruns are a very real possibility for such an ambitious project. But like many projects whose ultimate reach is far greater than the blueprint suggests, the “new” Suez Canal is designed as much to spark a national revival as it is to move ships between seas.
