Suez Canal to increase transit fees
Egypt’s Suez Canal Authority (SCA) announced January 31st it will raise transit fees on ships using the waterway by 2 to 5% starting May 1st.
Suez Canal Authority to increase transit fees
By Waleed Abu al-Khair
Egypt’s Suez Canal Authority (SCA) announced January 31st it will raise transit fees on ships using the waterway by 2 to 5% starting May 1st.
“It was decided that transit fees would be raised by 5% on tankers carrying crude oil, petroleum products, chemicals and other liquids and dry bulk vessels, by 2% on container ships and car carriers, and 3% on other types of ships,” said SCA head Lt. Mohab Mamish in a statement.
It is the second fees hike in a year, as the SCA raised transit fees by 3% on all carriers last March.
DECISION TO RAISE FEE MET WITH MIXED RESPONSE
Fakhreddine Awadallah, a professor of economics at Ain Shams University said the decision to raise transit fees came at the right time, “especially in view of the decline in foreign currency sources due to the drop in tourism sector revenues and import/export activity”.
Awadallah put the Suez Canal revenues at nearly $5 billion on average.
The increase is essentially tied to the rise in global prices for maritime shipping between Asia and Europe, he said, adding that the decision was made following extensive studies of international maritime transport activity and the global economic outlook conducted by a group of economists and maritime transport experts.
The fee hike will provide an annual increase in revenue of at least $250 million, he said.
“Despite the black cloud hovering over the economies of some European countries, the outlook for some East Asian countries confirms an economic breakthrough and recovery, especially in China and Taiwan, which will certainly impact maritime traffic and thus [lead to] higher maritime shipping prices,” he added.
The SCA’s decision, however, has met with some criticism.
On February 5th, Peter Hinchliffe, secretary general of the London-based International Chamber of Shipping, said in a statement that “most international vessel management companies are operating under the worst conditions in living memory, inasmuch as a large number of ships are jostling over a very small number of shipments”.
“This is not a good time for SCA to announce a fee hike, which is seemingly extremely burdensome to some commercial sectors,” he said. “Many ship owners will find it impossible to pass [the cost] on to customers.”
Rashad Mahmoud, of the Centre for Investment Studies at the National Institute of Planning, said he was surprised by Hinchliffe’s statement, adding, “Even with this transit fee hike, passage through the Suez Canal is still the cheapest and easiest route around the world and the shortest between Asia and Europe.”
On the possibility of ships taking alternate routes and passing around the Cape of Good Hope, Mahmoud said, “This talk is not based on facts, because the passage around the Cape of Good Hope is longer by two full weeks at the universally used sea speed of maritime carriers, which translates to significant increases in shipping costs.”
SUEZ CANAL STILL THE ‘SAFEST’ ROUTE
Ali Arafa, an engineering consultant with the Ministry of Transportation’s Strategic Studies Department, said a discussion of maritime transport should consider several points, chiefly security, piracy, cost and time.
“From a security standpoint, the Suez Canal is one of the safest waterways in the world, as was recently shown by events in cities located on the banks of the Canal [Port Said, Suez and Ismailia], which had no impact on traffic and security,” he told Al-Shorfa.
“It should also be noted that international shipping lanes are coming under frequent piracy attacks, which are likely to occur along other waterways, such as Cape of Good Hope, for example, but are a non-issue with the Suez Canal,” he said.
As for the time and cost factors, Arafa said despite the increase in fees, transit through the Suez Canal is still less costly than other waterways and remains the least time-consuming option.
