Suez Canal Authority Receives Bids for Logistics Hub Expansion

The Suez Canal Authority (SCA) reported that bids have been received to develop an international industrial and logistics hub around the Suez Canal. The SCA is hoping this hub will increase revenue and attract more ships to the area of 29,000 square miles around the proposed hub. Political turmoil and unrest in recent years in this area have decimated the economy. The head of the Suez Canal Authority, Mohab Memish, is eager to accomplish the hub, stating, “Investors must find service here at an international level because if they do not find it here they will go some place else.’ The expansion project (also called the “Third Set of Locks Project”) will double the capacity of the canal, creating a new traffic lane to allow more and larger ships to use the canal. The project also calls for:

• Two new locks, one each on the Atlantic and Pacific sides
• Excavation of new channels for the new locks.
• Widen and deepen existing channels.
• Raise the maximum operating level of Gatun Lake.

Documents concerning the details of the bid were available until January 23, and the Suez Canal Authority selected 14 Egyptian and international bidders, among the 33 groups who responded. A master plan must now be presented to the cabinet members within six months. Political unrest in the area, and the repercussions on other shipping lanes worldwide, complicate the expansion issue. Ports in the United States, including the Eastern Seaboard (Baltimore, MD, Norfolk, VA and Miami, FL) are already prepared to accommodate the larger ships that the expansion project will generate. Other ports are still considering necessary renovations, such as dredging, blasting, and increasing water levels. Internationally, Jamaica and many Caribbean and Latin American countries have begun to look into improving their existing infrastructures, to accommodate the increase in quantity and size of the ships that would be traversing their regions due to the expansion. In regard to the political arena near the canal, opposition groups are accusing the current administration of attempting to sell public land within the area to foreign countries, complicating the unrest already prevalent in the area. The opening of the expanded Panama Canal is currently scheduled for April 2015. Because the Suez Canal is the fastest shipping route between Europe and Asia, development would be extremely beneficial for shippers and consumers internationally, as well as for the citizens in the areas surrounding the canal. Once the expansion is complete, the canal will accommodate ships nearly three times larger than the ships that cross the canal today. Currently, the Suez Canal brings in $5 billion a year.