Opinion

Suez Canal expansion to speed up and cut cost of Egyptian logistics

30 March 2016

The Suez Canal expansion features six seaports

Khaled El Haggan CEO EGO Egypt
Khaled El-Haggan

SS-EGYPT

Launched on 5 August 2014 by Egyptian president Abdel Fattah el-Sisi, the expansion of the Suez Canal – an artificial sea-level waterway in Egypt, connecting the Mediterranean Sea to the Red Sea – aims to expand the region’s role in international trading and develop the three canal cities of Suez, Ismaïlia, and Port Said. Khaled El-Haggan, CEO of the Egyptian Growers’ Organization (EGO), explains how the mega-project should help all Egyptian exporters and importers across various trading sectors, especially fresh fruit and vegetable suppliers

Many logistics projects that support the fresh produce export trade have been carried out in Egypt and others are in the phase of implementation.

For example, the Horticulture Export Improvement Association of Egypt (HEIA) has its own coldstorage facilities directly within the airport at Cairo to facilitate its members. HEIA has also built and developed a packhouse and coldstore in Luxor in the south of Egypt. This has developed a lot of opportunities for employment too.

In terms of the fruit and vegetable trade with the UK, currently most sea freighted Egyptian produce exports go directly from the Port of Alexandria [in the north of Egypt] to the Port of Felixstowe. Egypt can also airfreight produce directly to the UK, depending on the crop and the season.

What we really need to complement this picture is more high speed ships that can transport crops quicker. For example, during the table grape high season we can ship to Europe in seven to eight days, otherwise normally it’s 14-16 days. Faster boats will allow us to deliver higher quality crops more quickly and with less effort to sustain the cool chain properly.

Suez Canal expansion

Now the Suez Canal Zone mega-project is underway in Egypt’s Sinai Peninsula it will open up a lot more options, facilities, and hopefully lower costs for Egyptian fresh produce exporters and their receivers in destination markets.

View this presentation for more information.

The project as a whole is extremely important to us. To compete with rest of world Egyptian produce growers and exporters need access to a larger number of ports with greater capacity and faster lines. This is crucial to Egypt’s success. The Suez Canal development will provide lower costs and faster transit times for Egyptian exporters to reach global destinations.

The canal has six main seaports that are undergoing major development as we speak. The main one opened very recently. It will add a lot of capability and opportunities, and we are starting to see the potential already.

The six ports will operate as connections to sea, road and air. There will be terminal points for ships coming to Egypt from the west or the east, and links between the two. The ports will help Egypt to export more, faster, and better.

The canal will also benefit from a major logistics area for warehousing and coldstorage. This will support Egypt’s aim of the industrialisation of agri crops – in terms of producing crops in different shapes and formats, such as processed produce or juices, etc.

Principal facilities

  1. The East Port Said (at the north entrance of the Suez Canal), for which development is underway. The major docks are done, and the rest of the port development is in progress.

  2. A link-up between the port and the inland transportation infrastructure, comprising three tunnels that pass under the Suez Canal; two for cars and trucks, and the third for rail.

  3. The Sokhna Port (at the south entrance of the Suez Canal). Phase 1 is completed, and Phase 2 has started.

  4. Four other ports that will be developed with a total of seven tunnels under the Suez Canal to connect these ports (and the newly developed communities) with the rest of Egypt.

  5. These ports will serve as a termination point for some freights coming from east or west for warehousing and/or rework; then re-service for clients. They will serve as well for the shipment of newly developed products out of factories in industrial areas around the ports; plus all logistics services that are needed for local exports and imports.

Logistics and warehousing 

Major logistics and warehousing areas are also under development at the Suez Canal to allow merchandise producers to store their merchandise and serve their customers promptly.

Industrial areas

Around each port, industrial zones with specific features, according to zoning, are under construction. Some are for heavy industries, others are for light industries, and most importantly hi-tech industries, thanks to the creation of smart zones and smart cities.

All companies around the world are being invited to start developing and producing their crops; and/or warehousing their products for better client services and faster transit times to market. In other words, to become more competitive.

Agriculture area

There will be an enlargement of planted areas with agriculture, mostly in the Sinai region close to the Suez Canal, where major production of crops is needed both internationally and locally. There will also be some agro-industrial development, and access to freight for the faster delivery of merchandise to the world.

New communities 

New cities and new housing facilities are being built around the port to accommodate Egyptians and non-Egyptians working in these areas.

Ship services 

A ship servicing and repair industry is being built to serve the large number of vessels expected to cross the Suez Canal and use the six ports.

Overall benefits

The Suez Canal as a vehicle for world commerce improvement will increase traffic capacity both in terms of the number of ships per day and the size of ships (up to 240,000 tonnes); thus allowing for the faster delivery of merchandise from east to west and a reduction of freight cost.

It will also reduce the wait time to cross the Suez Canal, thus reducing the cost of sea freight and reducing further the delivery time of merchandises; when compared with other routes for merchandise delivery. Once the project is finished and in service, the results will start to show and the benefits will increase over time. 

Further materials

Presentation: The Suez Canal – The Great Egyptian Dream
Website: Suez Canal Special Economic Zone
Report: Egypt launches Suez Canal expansion
Website: Suez Canal Authority – Future Plans
Website: East Port-Said Region
Website: Interactive Maps


SS-EGYPT

Read other Sourcing Spotlight on Egypt articles:

Buyers eye Egypt for reliability and quality
UK still top of the pyramid for Egypt’s fresh produce exporters
New Egyptian alliance EGO pledges year-round direct offer for UK buyers
PICO eyes UK growth prospects for non-traditional Egyptian produce
Egypt's Belco diversifies product basket with raspberries and garlic

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