The Japan News by The Yomiuri Shimbun
Shipping firms seek out alternatives to Suez Canal
The recent stranding of a large container ship in the Suez Canal, a key artery of global marine transport, caused more than 400 ships to be stuck around the canal at one time, highlighting the risks associated with maritime transport.
The canal opened in 1869, connecting the Mediterranean Sea and the Red Sea. The 193-kilometer-long canal is used by about 15,000 vessels each year. According to the Suez Canal Authority, the total amount of cargo transiting the canal was about 1.2 billion tons in 2019, or about 10% of all the cargo transported by sea around the world.
To prevent transportation and distribution from being disrupted by accidents and other causes, efforts are underway around the world to diversify transport routes.
THIRD ROUTE
On March 29, just after the container ship was stranded in the Suez Canal, the Russian energy ministry released a statement calling for greater use of an Arctic Ocean route, saying it was secure and cost-competitive, allowing a significant reduction in the time needed for transport.
For transport between Yokohama and Hamburg, the southern sea route that passes through the Suez Canal is about 21,000 kilometers long, while the Arctic Ocean route is about 13,000 kilometers, or about 60% of the southern route.
The Arctic Ocean route can currently be used for nine to 10 months a year, mainly during summer. However, some expect the volume of cargo on the Arctic Ocean route will double or more because it will be able to be used throughout the year by 2025 to 2030, due to the melting of sea ice caused by global warming.
In November and December last year, 10 distribution companies including Nippon Express Co. transported auto parts, air-conditioning equipment and other goods by sea from major ports in Japan to Vladivostok, Russia, where the cargo was transferred to Trans-Siberian Railway trains and carried to Europe.
This project was conducted by the Land, Infrastructure, Transport and Tourism Ministry to test combined sealand transport connecting Asia and Europe. The ministry aims to make this a third transport route, following sea and air transport.
The transport cost via the combined route was nearly twice as much as that using the Suez Canal. However, when it comes to the time involved, sea transport is said to take about 40 days under ordinary circumstances, while the route using the Trans-Siberian Railway needed just half of that.
Since January this year, companies including the Tokyo-based distribution company Toyo Trans Inc. have been using the railway for consolidated services, which combines cargo from several owners into one shipment.
RISING RATES
Demand connected to stay-at-home lifestyles amid the global coronavirus pandemic has led to a shortage of containers across the world, and charges for marine transport are rising significantly.
Between Japan and Germany, for example, the freight charge for an ordinary 40-foot container was about ¥150,000 six months ago, but it has since increased to more than four times that, or about ¥650,000.
Transport using the route involving the Trans-Siberian Railway costs less in some cases. “Our company is deluged with cargo,” an official at distribution company Nissin Corp. said.
However, the railway’s carrying capacity per trip is just 1/30th that of a large container ship, so the route has been unable to handle all shipping requests.
STRAIT OF MALACCA
For Japan, the Strait of Malacca off Malaysia has been an international distribution base as important as the Suez Canal. The strait connects East Asia and the Middle East, and 80% of the crude oil imported to Japan is transported via the strait. For this and other reasons, the strait can be said to be a lifeline for the Japanese economy.
Recently, congestion of large vessels has increased in tandem with the economic development of China and Southeast Asian countries. In addition, pirate attacks have made it difficult to ensure the smooth passage of vessels.
“Securing alternative routes will bring considerable benefits for the country’s energy security,” a senior official at a major power company importing crude oil said.
Thailand’s Land Bridge project is intended to link a 100-kilometer section between the Andaman Sea on the west side of the Malay Peninsula and the Gulf of Thailand on the east side by road and rail. There are hopes that this route could serve as an alternative to the Strait of Malacca.
Cargo would be transferred from ships to land-based transportation. The completion period is undecided, but the project saw progress as the Thai
Cabinet approved research expenses in September last year.
COMPENSATION CLAIMS
The Egyptian Suez Canal Authority is calling for Shoei Kisen Kaisha Ltd., the owner of the stranded container ship, Ever Given, to pay $916 million (about ¥100 billion) in compensation. The ship was seized by a court in Egypt and is now anchored inside the canal.
Shoei Kisen Kaisha is based in Imabari, Ehime Prefecture, and is a group company of Imabari Shipbuilding Co., the country’s largest shipbuilder based in the same city. Shoei Kisen leases vessels built by Imabari Shipbuilding to marine transport companies in and outside Japan and others.
Ever Given was leased and operated by the Taiwan marine transport company Evergreen Marine Corp.
Facing the Seto Inland Sea, Imabari was known as a base for the Murakami pirates in the past, and companies related to the marine transport industry are still concentrated in the city. Imabari Shipbuilding is one of the leaders in this industry, and the group has a large number of vessels.
Imabari is said to be one of the four major bases for shipowners along with Northern Europe, Greece and Hong Kong.
In the case of marine accidents such as ships getting stranded, responsibility usually lies with the shipowner, not the marine transport company operating the ship. Compensation is typically covered by the shipowner’s insurance.
However, in the recent incident, the burden of compensation will be shared among the shipowner, cargo owners and the marine transport company. The framework of payment and the amount of compensation for each party likely will be decided in the future.
The compensation sought is enormous, and it will take time to determine the scope of responsibility and the amount of the damages. (April 26)