Nicaragua Canal may hold 'big savings' for carriers
21st July 2014 20:17 GMT

The proposed Nicaragua Canal could help carriers save "significantly" on sailing times and fuel consumption.

Maritime analysis agency SeaIntel, which published a new analysis of the route, said carriers sailing from Asia to the US East Coast that use the route over the Panama Canal could reduce their bunker consumption by 17-30%, depending on the size of the ship, maritime news provider ShippingWatch reported.

Plans for the $40-billion Nicaragua Canal were approved by an Nicaraguan authority committee on July 8.

"Our analysis clearly shows that it would be beneficial for the carriers from a cost perspective to use the coming Nicaragua Canal on the Asia-US East Coast services instead of using the Panama Canal, due to the shorter sailing distance and the possibility for the deployment of larger vessels," SeaIntel said in its report. However, the agency added that the canal still remains mostly an idea even though there is currently a comprehensive feasibility study underway to assess the costs of the project.

SeaIntel based its analysis on two services from Asia to the US East Coast. One through Panama and one through the Suez Canal. The route through the Panama Canal has a total distance of 21,500 nautical miles, while the same service replaced with the Nicaragua Canal has a total distance of 20,200 nautical miles, which according to SeaIntel corresponds to a 6% reduction. The firm added that if the Suez Canal is replaced with the Nicaragua Canal, the result is a 5.5% reduction.

The firm's analysis revealed that if carriers use ships of 12,500 twenty-foot equivalent units (TEUs) it will be possible to reduce the speed from 14 to 13 knots by using the Nicaragua Canal instead of the Panama Canal, resulting in a 17% annual reduction in fuel consumption. SeaIntel added that if the ports on the services are ready to handle ships of 17,500 teu by 2020, carriers will be able to reduce their bunker costs by 25-30% for 15,500 and 17,500 teu vessels, respectively.

Construction of the Nicaragua Canal is expected to begin in December of this year and is expected to become operational in 2020.

Ashley Bhan, 21st July 2014 20:17 GMT

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