Logistics Terms What Are the Differences? Suez Canal vs Panama Canal

Global trade and logistics transportation play a key role in the modern economy. Canals connect the trade and economic activities of many different countries. In particular, the Suez Canal and the Panama Canal, two of the world's largest canals that ships traveling between Asia, North America, and Europe must pass through, have become centers of international trade.

Let's take a look at the features of the Suez Canal and the Panama Canal, which serve as hubs for international trade and connect the trade activities of various countries.

Completed in 1869, the Suez Canal is the first artificial waterway in human history that dominates the trade routes between Europe and Asia, reflecting global economic trends quickly and playing a crucial role in the international economy. By connecting the Eurasian and African continents via the Suez Canal, the London-Singapore route was shortened from 24,500 km to 15,027 km via Cape Town, and the London-Mumbai route was shortened from 21,400 km to 11,472 km.

The Suez Canal, which is 160 to 193.3 km long, about 205 m wide and 24 m deep, takes about 15 hours to transit at 8 knots and carries about 12% of the global trade volume, making it the fastest route between Africa, Asia and Europe and a direct link between the Red Sea and the Mediterranean Sea, primarily for ships carrying oil and gas to Europe.

The second Suez Canal was built on a 72-km section that is part of the existing Suez Canal (total length: 190.3 km) that connects the Mediterranean Sea to the Red Sea. Of the 72 km, 35 km are new waterways built alongside the existing canal, while the remaining 37 km are widened and deepened. The new canal allows for two-way traffic, expediting ship transit.

Completed in 1914 after 10 years of construction, the Panama Canal is a classic locked type canal, approximately 80 to 82 km long, 192 to 222 m wide, and 14 m deep, that connects the Pacific and Atlantic Oceans through the Isthmus of Panama. Using the Panama Canal to pass through the Pacific and Atlantic oceans from the United States reduces the shipping distance by approximately 15,000 km compared to going around South America.

The Panama Canal is considered one of the seven wonders of the world in the 20th century and was a highly complicated project that utilized new construction methods and equipment to lift ships from the ocean to the top of a mountain, cut through Panama, and then take the ships back down the mountain and out to sea. It takes about 24 hours, including waiting time, to pass through the canal.

Concerned about the growing size of ships and increasing bottlenecks, the Panama Canal was completed in 2016 after nine years of construction by building a new canal next to the existing one. The new canal can accommodate 92% of the world's liquefied natural gas (LNG) carriers and 97% of all vessel types, significantly changing the global maritime logistics market share.

The Suez Canal is a waterway connecting the Eurasian and African continents, 160 to 193.3 km long, approximately 205 m wide, and about 24 m deep. The Suez Canal is a horizontal canal with a natural inflow of seawater on both sides, allowing vessels to travel at 8 knots through the flat waterway. The Suez Canal is characterized by its pointed bottom, which means that vessels must have a pointed bottom to pass through the canal.

The Panama Canal, on the other hand, connects the Pacific and Atlantic oceans through the Isthmus of Panama, and because the difference in elevation between the two oceans is 26 m, the canal uses "locks" and surrounding lakes to make up the difference in elevation. The canal's locks are located on either side of the artificial channel that connects the two bodies of water, and when a ship enters the dock, the 8.84-meter-high locks are closed and water is released from the highest lake to regulate the water level inside the locks. When the water level inside a deck rises or falls to equalize with the water level inside the next deck, the deck is opened and the ship moves forward, and the ship is towed by a tracked electric vehicle mounted on the wall of the channel.

Since the width and depth of the canals are fixed, shipping lines and companies build ships that can pass through the canals. The Suez Canal and the Panama Canal, the world's two largest canals, are the standard for building ships.

The Suez Canal is a narrow waterway, about 205 m wide and 24 m deep, which limits the size of ships that can pass through to 400 m long and 77.5 m wide, and containers up to 19,000 TEUs. Therefore, shipping companies build their ships to the size of the largest vessel that can pass through the Suez Canal, and this standard size is known as the "Suezmax".

The Panama Canal was built as a locked canal with a mountain range located in the middle of the isthmus, and does not allow ships to pass straight through a flat channel like the Suez Canal, but rather as a locked canal with a narrow, short passage through each lock. Therefore, the size of "Panamax" ships was limited to a maximum length of 294 m, 32.3 m wide, and 4,500 TEUs. The narrow and time-consuming locks were unable to handle the enormous volume of shipping and increasingly larger vessel sizes, so the canal was expanded to allow ships up to 366 m long, 49 m wide, and 14,999 TEUs to pass through, which are referred to as "Neo-panamax" ships.

In 2022, a total of 23,000 vessels transited the Suez Canal, carrying 1.4 billion tons of cargo. This is a significant increase from the 21,700 vessels that transited the Suez Canal in 2021. SCA Chairman Wael Qaddour attributed the record revenues to the recent surge in offshore energy carriers, increasing the contribution of the Suez Canal. In 2022, the Suez Canal achieved record revenues of $7.9 billion. ^[1]

The Panama Canal, which is used by 13,000 to 14,000 ships annually, has recently been disrupted by the worst drought in 100 years, as the level of Gatun Lake, which supplies water for the canal's operations, has dropped to its lowest level due to lack of precipitation, restricting ship transits.

The Panama Canal Authority adjusted the draught limit for neo-Panamax vessels, which is currently 44 feet (13.41 m), to 43.5 feet (13.26 m) starting June 25, 2023, and further reduced it to 43 feet (13.11 m) starting July 2023. ^[2]

So far, we have been comparing the Suez Canal to the Panama Canal. The Suez Canal has demonstrated its strengths in handling larger vessels and higher volumes, and the Suez Canal Authority (SCA) recently announced that product and chemical carriers will be added to the fixed rebate scheme for long-distance transits on the Suez Canal starting in July 2023.

The SCA has been trying to attract new customers through its rebate policy since 1987, but the expansion of the Panama Canal in 2016, one of the world's two largest canals alongside the Suez Canal, has made it a full-fledged competitor, and the company is introducing a variety of rebate conditions to increase its competitiveness. The expansion of the Panama Canal allows for the passage of larger ships, but it is important to note that the canal has recently been experiencing severe drought conditions.

The choice of logistics transportation depends on transportation needs and preferences, and the appropriate choice should be made by considering the advantages and characteristics of each canal. The logistics industry will have to watch the development and innovation of both canals and choose the best one for efficient logistics transportation.

# Reference [1] https://www.kita.net/cmmrcInfo/cmmrcNews/cmmrcNews/cmmrcNewsDetail.do?pageIndex=1&sSiteid=1&nIndex=%2072213
[2] https://www.reuters.com/world/americas/drought-hit-panama-canal-further-restricts-maximum-ship-depth-2023-06-22/