Maersk Line Switching from Panama to Suez Route

More shipping lines may abandon the Panama Canal for the Suez

Maersk Line is switching its Asia-U.S. routes from the Panama Canal to the Suez Canal, allowing it to use larger, more fuel-efficient ships, and other container lines may follow suit, Bloomberg reports.

Starting in April, the company will use 9,000 twenty-foot equivalent unit (TEU) vessels to move through the Suez rather than sending two ships of half the size on the other route, according to Maersk Line CEO Søren Skou.

"The economics are much, much better via the Suez Canal simply because you have half the number of ships," Skou said.

"One of the reasons for why this is happening now is that the cost for passing through the Panama Canal has gone up."

He said fees for ships going through the Panama Canal have tripled over the past five years to $450,000 per passage for a 4,500 TEU vessel.

Bonnie Chan, an analyst at Macquarie Group Ltd., said other carriers will probably follow Maersk's example.

"This gives shipping companies a bit more flexibility in managing capacity," she said.

Skou said the distance from China to the U.S. east coast is 4 to 5 percent more using the Suez route rather than the Panama one, but from Singapore it is shorter to go through the Suez Canal.

The expansion of the Panama Canal to accommodate larger ships is currently under way, but its opening date has been delayed by 6 months past the original October 2014 date, 100 years after the canal first opened.

The Panama Canal Authority’s administrator Jorge Luis Quijano in January told Bloomberg News that the delay was still 6 months, but added that commercial transits would begin by June 2015.