Shipping lines return to piracy-prone route

Belgian dredging vessel “Pompei”. Somali
Belgian dredging vessel “Pompei”. Somali pirates released this week, the crew of the Pompei captured in mid-April. Seafarers will not be allowed to carry weapons despite rising piracy cases. /Reuters 

Shipping lines have been forced to reverse their policy of re-routing from the piracy-prone routes to Cape of Good Hope amid high cost of bunker fuel.

In February this year, liners opted for the route for their lightly-laden east-bound container ships to avoid paying Suez Canal fees and due to the high insurance surcharges for sailing through the pirate-ridden Gulf of Aden.

Due to the problem, transit fee for sailing a 9,400 Twenty foot Equivalent Units (TEU) box is still slightly below $600,000 after the increase.

Before the route shift to Cape of Good Hope, shippers had started to reap the benefits of the drop of the bunkering costs due to improved petrol prices.

Shipping lines said the cost of the detour, use of Cape of Good Hope for their east-west or its reverse journey – despite taking a week more – was less than the extra cost they stood to incur if they used the Suez Canal route under the new charges.

They said the Cape of Good Hope route would enable them save up to $330,000 in the cost of insurance and crew costs.

The liners had made the decision based on a bunker fuel price which was then below $350 per tonne. With prices having risen to above the $400, the shorter route has become a better option once again for the shipping lines.

Larger vessels
Maersk Line was the trendsetter in using the Cape of Good Hope route and is also among the first to revert to shorter and quicker canal route, with its AE-6 service reinstated as from the end of May.

The AE-6 service uses vessels in the 9,500 to 10,000-TEU range with a call now reinstated at Salalah.

The company’s AE-7 service using the larger 14,000-TEU range vessels were also expected to return to the Suez before the end of this month.

French carrier CMA GGM has also announced a similar return to the canal route on its FAL-2 service making use of nine 9,500-TEU ships— as a result the rotation drops from nine weeks to eight with this resumption.

Likewise Swiss/Italian line MSC has also returned to the canal route for its Lion service and its loop and Taiwanese carrier Evergreen and China’s CSCL which have developed a joint service (CEM) say they will be creating a new routing via the canal.

The only service remaining around the Cape at present is the Grand Alliance on its EU-3 service using 9,000-TEU ships, although Alphaliner forecasts that this will also change if the bunker prices remain above $ 350 per tonne.

Meanwhile, Swire Shipping’s Eastabout Round the World multi-purpose monthly service, making use of four multi-purpose ships, each with a capacity of 1,800-TEU, has began doubling back via the Cape of Good Hope, directly from Singapore and Jakarta to the East Coast of North America, reports the American Shipper.

Shipping costs
But a source at one of the liner office in Mombasa said it was unlikely for the cost of shipping to go down because even along the Suez route the distance covered has been increased due to the piracy.

“Vessels used to take between four to five days to navigate through the Suez to Mombasa, but security forces manning the area have diverted the route towards the deep sea and ships are now taking nine to 10 days and that is an extra cost,” said the source who did not want to be named.

It costs $15,000 for a ship to sail per day and the extra five days that it would cover due to the piracy problem would cost $75, 0000 and that extra cost would have to be passed to the shippers and ultimately the consumers, he sad.