Suez or Cape: A Routing Guide for Petrochemical Buyers

For a cargo moving from the Arabian Sea to Europe or the Mediterranean, there are two sea routes: through the Red Sea and the Suez Canal, or around the Cape of Good Hope. The cheaper route on paper is not always the cheaper route in practice, and the safer route is not always the one named in the offer. The buyer's job is to make sure the contract says which route the price assumes, who pays if it changes, and what happens to delivery dates and insurance when it does.

This guide is written to stay useful whichever route is in favour at the time you read it. It does not describe current shipping conditions, traffic or security. Those change, and anything stated here as a snapshot would date quickly. It sets out the mechanics: how the two routes differ, which buyers are affected, the clauses that allocate the risk, and how to compare two quotes properly. It is general guidance, not legal or insurance advice.

Who is actually affected

The choice between Suez and the Cape only arises for cargo whose voyage would otherwise pass through the Red Sea. For Chemineral's loading ports, Sohar and Salalah, that means:

• Europe and the Mediterranean. Cargoes can go via Bab el-Mandeb, the Red Sea and the Suez Canal, or south and around Africa. This is where the choice bites.
• Red Sea destinations. Ports inside the Red Sea are reached through Bab el-Mandeb from the south. For these, the Cape is not an alternative, but the security and insurance considerations for the approach still apply.
• East Africa, South Asia and the Gulf region. These voyages do not use Suez. A buyer in these markets is unaffected by the canal itself, but may still feel indirect effects, such as ship availability and freight levels when vessels are repositioned elsewhere.

Before spending time on the rest of this guide, check whether your voyage passes through the Red Sea at all.

The two routes, in plain terms

Via Suez. The ship passes through the Gulf of Aden, Bab el-Mandeb, the Red Sea and the Suez Canal into the Mediterranean. It is the shorter route to Europe and the Mediterranean from the Arabian Sea. It adds canal dues and, depending on the circumstances, additional war-risk premium and possibly security costs.

Via the Cape. The ship goes south along the East African coast, rounds the southern tip of Africa and turns north along the Atlantic. It is much longer. It avoids canal dues and the Red Sea, but costs more in fuel, ship time and cargo carrying time, and meets different weather.

How much longer is the Cape?

The extra time is a calculation, not a quotation:

extra days = extra distance in nautical miles ÷ (speed in knots × 24)

A hypothetical example: if the Cape route adds 4,000 nautical miles for a given pair of ports, and the vessel steams at 12 knots, which is about 288 nautical miles a day, the Cape adds roughly 14 days. If the vessel steams at 10 knots, it adds nearer 17 days. The distance figure here is invented for the example. Ask your seller or freight forwarder for the actual distances for your ports and the speed the quote assumes. Do not accept "about two weeks" as a number you cannot reproduce.

Every extra day has three costs for the buyer:

1. Freight. Ship time is paid by the day, either as charter hire or as part of the voyage freight, and fuel burn rises with distance.
2. Cargo carrying cost. The goods are paid for, or committed, but not yet in your tank or warehouse. Money tied up in transit has a cost.
3. Condition risk. A longer voyage gives more time for moisture uptake, caking, heating or ageing, depending on the cargo.

The clauses that decide who bears the risk

Routing risk is allocated by contract. If the contract says nothing, you may find yourself arguing about it at the worst moment. Check each of the following.

1. The routing basis of the price

State in the offer and the contract whether the delivered price assumes the Suez route, the Cape route or the seller's option. If the offer is silent, ask. A price on a Suez basis that silently becomes a Cape voyage gives the seller a cost that it may try to pass on.

2. The change-of-route clause

If the route changes after signature, the contract should say who bears the extra freight, the extra insurance and any canal or security charges, and whether the price changes, by how much and on what evidence. Without it, the question gets settled by whoever has more leverage.

Options in order of how much they protect the buyer:

• Fixed delivered price, seller bears routing risk. Simplest for the buyer, and usually priced in by the seller.
• Fixed price with a defined adjustment. For example, a stated per-tonne amount or a formula agreed in advance if the vessel diverts, and a right to cancel if the adjustment passes a threshold.
• Open-ended pass-through. The buyer pays whatever the extra costs are. Avoid this unless you have a cap and a right to see the invoices.

3. The liberties or deviation clause

Bills of lading and charter parties usually give the carrier some freedom to deviate for safety or other reasons. Such clauses can be broad. Read how they apply and whether they let the owner choose a longer route without your agreement. The commercial question is who pays when the owner uses them.

4. Laycan, shipment window and ETA

The delivery date in your contract is only as good as the voyage time behind it. A route change moves the arrival date, so the contract should address:

• whether the shipment window refers to loading or arrival;
• whether the seller must give notice of the intended route and updated ETAs, and how often;
• what counts as a late delivery, and the remedy, such as a right to cancel after a stated delay;
• how tolerances work for a long voyage.

See our laytime and demurrage guide for how laycan and notice of readiness work.

5. Insurance and war risk

Standard marine cargo cover excludes war and strikes risks. These are insured separately and can be repriced or withdrawn by underwriters on notice. Read our marine cargo insurance guide for the cover levels. For routing, the points to check are:

• Who buys the insurance. On CIF terms the seller arranges it, but usually at minimum cover. On FOB or CFR terms the buyer does.
• Whether war and strikes cover is included, and whether the contract says who pays any additional premium that applies to the voyage.
• Waterborne limits. War cover under the standard clauses generally applies only while the cargo is on the vessel, not in port or storage. Understand where cover starts and ends.
• Notice of cancellation. Insurers may be able to cancel or reprice war cover on short notice. Check the period in your policy and ask your broker how it applies to a cargo already at sea.
• Hull war-risk premiums. Shipowners also pay additional premiums for hull war cover in areas underwriters list as higher risk, and may pass them on through freight or a surcharge. Ask whether the quoted freight includes them.
• Listed areas. Underwriters publish lists of areas where additional premiums apply. The lists change. Ask your broker for the current position at the time of purchase, instead of relying on an article.

6. Right to cancel, price review and force majeure

If a route becomes unavailable, or more expensive than a stated limit, can either party cancel? Does force majeure cover a change of route, or only a complete blockage? Many clauses are written for blockages and say nothing about a diversion that is merely longer and dearer. Say what you mean.

7. Charges at the discharge end

A longer voyage that delivers into a different week, or onto a different tide, can change berth availability, storage and labour at your port. Confirm who pays for rebooking and any resulting delay. This links to the demurrage provisions already mentioned.

ETA and laycan risk, step by step

Many disputes arise because nobody tracked the ETA while the ship was at sea.

1. Agree a reporting schedule. For example, notice of the vessel's name and nomination, a first ETA before loading, then updates at stated intervals and at any change of route.
2. Get the route in writing. Ask for the intended route as well as the ETA. An ETA of the wrong route is meaningless.
3. Check the ETA against your window. Compare with your berth booking, storage availability and customs plan.
4. Treat the first ETA as provisional. Weather, port congestion and earlier cargoes all move a sailing. Build a margin appropriate to the route's length.
5. Re-confirm everything at each update. Berth, labour, transport and documents.
6. Keep the evidence. Messages that record a route change are what you will rely on if a claim follows.

A longer route does not change the principles. It increases the time over which things can go wrong and the number of days by which an ETA can move.

Comparing offers like for like

An offer for delivery to a European or Mediterranean port can be written in several ways that look similar and are not.

Chemineral quotes Suez and Cape routing side by side so that the buyer can see the price effect of each route in the same offer, and firm offers are valid for 72 hours. Ask any supplier to do the same.

A hypothetical comparison

All figures are invented to show the method. They are not quotes or typical costs.

A buyer in a Mediterranean port receives two offers for the same product, specification and window.

• Offer A: USD 700 per tonne CIF, via Suez, 20 days' transit, war-risk premium for the buyer's account if applied.
• Offer B: USD 712 per tonne CIF, via Cape, 34 days' transit, all risks included.

At first sight A is USD 12 per tonne cheaper. Now adjust both to the same basis.

1. Carrying cost. Assume an 8% annual cost of capital on a USD 700 cargo value. One day costs about 700 × 0.08 ÷ 365 = USD 0.15 per tonne. Over its transit, A carries about USD 3.07 and B about USD 5.21.
2. War-risk premium. Offer A leaves war risk for the buyer's account. Suppose underwriters quote 0.2% of the insured value for the Suez voyage. At 110% of USD 700, which is USD 770, that is USD 1.54 per tonne, added to A.
3. Adjusted totals. A is about 700 + 3.07 + 1.54 = USD 704.61. B is about 712 + 5.21 = USD 717.21. The gap is roughly USD 12.60 in favour of A, so the adjustments barely changed the picture.
4. The unpriced risk. Now suppose A's contract says nothing about diversion, and the vessel is sent round the Cape mid-voyage at an extra cost of USD 15 per tonne, which the seller passes on. A's total becomes about USD 719.61, dearer than B, and A also arrives later than it promised.

The lesson is not that one route wins. It is that a comparison needs the same Incoterm, the same insurance, the same window, an explicit route, and a rule for what happens if the route changes. Without the last item, the cheaper offer is cheaper only until something moves.

Practical rules

• Ask for both routes. A supplier who quotes only one route has either decided for you or has not looked at the other.
• Write the route into the contract, along with the price consequence of changing it.
• Allow a realistic shipment window. Longer routes need more margin. Tight windows turn minor delays into disputes.
• Do not assume the cheapest freight is the lowest delivered cost. Include carrying cost, insurance and risk.
• If you have a trusted forwarder or chartering desk, consider FOB. You then choose the route and the cover yourself. Compare the total with a delivered quote on the same basis.
• Re-check at the time of purchase. Route conditions change and so do insurance terms. Check them with your broker or forwarder on the day you commit, not when you read a guide.
• Keep records. Vessel nominations, ETAs, route notices and insurance certificates should be on file.

Frequently asked questions

Which route is cheaper, Suez or the Cape?

It depends on the freight market, canal dues, fuel cost, insurance and the value of the cargo's time at the date you buy. The Suez route is shorter, but it carries canal dues and may carry additional insurance premium. Compare complete delivered quotes on the same terms.

Who pays if the vessel changes route after I have bought?

Whoever the contract says. Under CIF or CFR the seller generally arranges the carriage, but a pass-through clause can move the cost to you. Under FOB the buyer arranges the ship and bears the cost. Read the change-of-route clause before you sign.

Does a longer route affect cargo quality?

It can. Longer transit gives more time for moisture pick-up, caking or temperature effects depending on the product. Packaging, hold or tank condition and the cargo's own characteristics matter. Ask your supplier about the cargo-specific risks on a long voyage, and make sure inspection and insurance cover them.

Is war-risk insurance included in a CIF price?

Not automatically. Standard cargo cover excludes war and strikes, and CIF requires only minimum cover unless the contract says more. Ask whether war and strikes cover is included and who pays any additional premium.

What should my contract say about delivery dates?

State whether the date refers to loading or arrival, require updated ETAs and the intended route, define late delivery and its remedy, and say what happens if the route changes. Allow a window proportionate to the voyage length.

Do I need to worry about this if I buy for East Africa or South Asia?

Generally not for the canal itself, since those voyages do not pass through Suez. You can still be affected indirectly, for example through freight levels and ship availability, but the main clauses discussed here apply mostly to Europe, the Mediterranean and Red Sea destinations.

Next step

If you are planning a purchase from Sohar or Salalah for delivery to Europe or the Mediterranean, send your product, quantity, discharge port and window through our contact page. Chemineral will quote Suez and Cape routing side by side, and firm offers are valid for 72 hours.