Friday, 19 August 2011 00:00
The ongoing events in the Middle East and Northern Africa have caused sea going shipping interests to look more closely at the strategic importance of the Suez and Panama Canals. Both are chokepoints in terms of the flow of today’s global trade. Even with the global recession, sea going trade remains dominant and is extremely important to the United States. Just look at some of the statistics.
Every day some 41 ships transit the Suez Canal. A very large portion of that commerce includes more than two million barrels of oil and petroleum products. In addition around 14 percent of the world’s liquefied natural gas is shipped through the Suez Canal. Any disruption at the Suez Canal would wreak havoc throughout the Middle East, Africa, Europe and even the East Coast of the United States.
If the Suez Canal were to close, as it did in 1967 due to the conflict between Israel and Egypt, it would take ships 16 days longer to deliver goods around Africa’s Southern tip. Almost 49 percent of the cargo through the Suez Canal going north is to European nations with most of the cargo energy related.
As you can see, any disruption at the Suez Canal would send economic shivers through the world.
Now, take a look at the other chokepoint – the Panama Canal. First, of the 40 some ships transiting the Panama Canal each day, around 28 are from or destined to ports on the Gulf or East Coast of the United States. Interestingly, 20 percent of the cargo transiting the Panama Canal is U.S. grain off to ports in Asia and the Pacific. Closing of the Panama Canal would add more than 20 days as vessels would have to go around the Southern tip of South America.
The strategic issues relating to any closing of the Suez Canal are totally related to conflicts in the area. The sinking of a large vessel in the Canal could be disruptive to traffic. And of course, any battles in the area could impact Canal traffic.
As for the Panama Canal, there is, in my opinion, more of a challenge. The current structure of the Canal’s three sets of locks would enable a terrorist to totally disable traffic through the Canal. Because of that concern, the United States, at the request of Panama, conducts security exercises at the Canal with a number of Central and South American countries.
I will never forget learning about a propane tanker being in one of the locks as U.S. troops moved to oust Manuel Noriega back in 1989. Management at the Canal were concerned that a Noriega loyalist could have hit the tanker with a grenade and cripple the Canal for months.
There is one other footnote to this piece. Several months ago, I received an email from a high school student in the Boston Massachusetts area. He was doing a school project about whether the Panama Canal was relevant in today’s economy. He asked me whether the Canal was out of date because of air cargo.
My reply was simple. Could a cargo plane carry four thousand automobiles or 500 thousand barrels of oil? The students email response stated that the Panama Canal was indeed very relevant.