Unrest Brings Downside Risk To East Port Said Forecast
BMI's 2013 throughput growth forecast for the Egyptian port of East Port Said, the largest container-handling facility in the country, is jeopardised by the current political unrest in the country. It has been reported in the Egyptian press that three major container-shipping lines are already diverting their cargoes from the port to the Israeli facility of Eilat.
The Egyptian city of Port Said, located at the northern entrance to the Suez Canal, has experienced two weeks of civil disobedience by its residents. Daily protests and demonstrations have taken place against grievances such as the killing of local citizens at a previous protest, the sentencing of local football fans found guilty of playing a part in January 2012 soccer riots, and more general socio-economic concerns. Part of these actions has centred on East Port Said, and these are presenting risk to our throughput forecast for the port in 2013.
Container operations at East Port Said are undertaken by the Suez Canal Container Terminal (SCCT), which is majority-owned by APM Terminals (55%), with COSCO Pacific (20%) and the Suez Canal Authority (10.3%) also involved, in addition to the National Bank of Egypt (5%) and the Egyptian private sector (9.7%). These operations are being disrupted by protestors who are blocking access roads to the port, closing down the facility for the past four days and forcing employees to find alternative routes to work.
Abd al-Khaleq Ayad, president of the board of directors at SCCT, has said in a public statement that losses through disruptions have risen to US$3mn already. The Egyptian Transport and Commercial Services Company (EGYTRANS) has stated that its storage activity at East Port Said had been halted and would not be resumed until the demonstrations stopped.
|East Port Said TEU Throughput, 2008-2017|
Now it has been reported in Egyptian English-language paper Daily News Egypt that major shipping lines are losing patience with the ongoing delays at East Port Said and have redirected their cargos. Quoting an anonymous source at the SCCT, the paper reports that CMA CGM, COSCO and Maersk Line have all sent their cargos to the Israeli Red Sea facility of Eilat instead.
BMI notes that should this prove correct it offers downside risk to our throughput growth forecast for East Port Said. As our forecast stands we see growth in box throughput of 8.6% in 2013, following an estimated expansion of 6.2% in 2012. As a major transhipment hub, benefitting from its enviable position on the Suez Canal, the port is less subject to the economic travails in Egypt with regards to its business, and so we had been projecting a more sanguine picture for the facility than with other Egyptian ports.
However, the political turmoil of Egypt is now coming to infringe on East Port Said's business also. While the port benefits from not being wholly reliant on Egyptian trade for its throughput, so shipping companies are not fixed on calling there; volumes can be transhipped from another facility. Should the turmoil in Port Said, and other cities along the Canal Zone, continue, we may have to revise our forecasts down.
Equally, if this comes to be a longer-term arrangement, the development could be a major boost to Eilat, whose box throughput has been largely curtailed in recent years. Israel is hoping to develop itself into an alternative to the Suez Canal for major East-West shipping routes by establishing a railway line linking Eilat with the Mediterranean.