Japanese Shipping Companies Looking For Suez Canal Alternatives

Monday, 24 May 2021

As the legal battle regarding the Ever Given ship grounding in the Suez Canal continues, Japanese Shipping Companies are planning to reduce the use of the Suez Canal route. They have categorically said that they are looking for an alternative route that can connect Asia with Europe so that they won’t have to rely on the Suez Canal anymore.

The companies had been exploring alternative routes for some time now and have decided to step up the search because of the ongoing fiasco involving the Ever Given ship.

Incidentally, the ship had run aground on 23rd March and had been reported on 29th March after halting the maritime trade for 6 days. But it’s the huge compensation of 916$ million dollars demanded by the SCA which has put off ship owners. The SCA has held the ship and the crew for ransom until the Japanese shipping company Shoei Kisen Kaisha who owns the ship agrees to pay the compensation.

Even local courts have acted in favour of the SCA much to the dismay of the Japanese owners. Although the SCA has reduced the compensation amount to 600$ million since then, the owners aren’t satisfied.

As of now, the owners have been waiting for the next court hearing which is scheduled for 22nd May while they lose valuable time to deliver the cargo. The SCA hasn’t allowed the ship to unload cargo and send it through other ships.

Experts think that this matter will eventually be beneficial for Russia and China if the owners are forced to pay.

As per Yoshitsugu Hayashi, professor of transportation policy and systems at Chubu University, the alternative to Suez Canal is likely to have some drawbacks which the Japanese companies have to consider.

As of now, the Japanese have the option of 3 alternatives and another under development route to consider. The first would be the long strenuous journey by the Cape of Good Hope in South Africa which is expensive and takes a long time.

Although less used, this could be beneficial as it would cut short the voyage to 19 days and also the thinner ice sheet due to global warming has made it more navigable in recent years.

Russia has also proposed the use of the Trans Siberian Railways as a connection between Europe and Asia. So, this is likely to be beneficial for them.

The Japanese company, Hankyu Hanshin Express, which has used the railway route recently has remarked that it is faster and cheaper than transporting through the sea. It is said to take 2 weeks less than the sea route and is also half of the air route expenditure.

One can simply put packages from Japan to Vladivostok from where it gets transported to the Polish city of Kutno via the Trans Siberian Railways.

Maersk has been known to operate a similar railway link. Meanwhile, China has developed a Belt and Road Initiative BRI for the trans-shipment of goods between Asia and Europe.

Increased usage of the Northern Sea Route and the Trans Siberian rail link is likely to boost Russia’s outlook. However, dealing with Moscow and Beijing is often a tricky and political issue.

Others have pointed out the fragility of the Trans Siberian rail link and the Arctic Shipping route stating that the former isn’t equipped to handle larger volumes while the latter isn’t operable throughout the year. Moreover, it’s likely to complicate Japan’s relations with the US.

The largest shipping company, Mitsui OSK Lines has remained noncommittal on this latest string of developments stating that they don’t see these as viable options as they lack specialist vessels that can make these journeys through the northern ice route in winter.

They have said that it can be a possibility in the future as the route is easier to navigate in summer.

Reference: dw.com