Suez Canal will increase transit fees by 10-15% from January 2023 amid global inflation – Urban and transport – Egypt
New increase in Suez Canal fees
According to an official statement on Saturday, the SCA said transit fees would increase by 15% for all types of vessels and 10% for dry bulk and cruise ships.
Osama Rabie, the SCA’s chairman, said the increase in canal crossing fees “is unavoidable and a necessity” in order to deal with the ramifications of the current global inflation rates which have reached more than 8%.
Global inflation has led to an increase in the cost of operating and maintaining the canal as well as an increase in the cost of navigation services provided to ships, Rabie explained.
The SCA is monitoring “unprecedented” daily increases in charter rates for most vessel types, the statement said.
The authority expects this trend to continue in the coming year, she added.
Daily tanker charter rates increased by an average of 88% in 2022 compared to 2021.
Meanwhile, daily charter rates for LNG carriers increased by an average of 11% in 2022 compared to 2021.
Rabie explained that the most important factor in determining Suez Canal transit charges is the average freight rate for various types of vessels.
Freight rates, especially for container ships, have increased consecutively and significantly in recent months, reaching higher levels compared to the period of the COVID-19 pandemic, the SCA chairman said.
Rabie stressed that “shipping lines will achieve strong operational profits throughout 2023 in light of the continued impact of disruptions to global supply chains and congestion in ports around the world, and also the light of the fact that shipping lines have secured long-term shipping contracts at very high rates.”
He added that the current rise in energy prices is also impacting SCA’s fee calculations.
He noted that, for example, the continued increase in both crude oil prices, which now exceed $90 per barrel, and LNG prices, which now exceed $30 per million thermal units, has led to an increase in average ship bunker fuel prices. .
This rise in energy prices increases the savings ships make by transiting the Suez Canal compared to other alternative routes, he noted.
The SCA takes into consideration “various changes in the global economy by devising clear mechanisms to calculate transit charges for ships, which include the savings they will realize by transiting the canal,” he said.
SCA has increased channel transit fees twice this year – in February by 6% and in March by 5-10%.
The Suez Canal, which connects the Mediterranean and the Red Sea, is the shortest sea route between Asia and Europe and the fastest crossing from the Atlantic Ocean to the Indian Ocean.
The sea-level waterway, which carries around 12% of world trade, is also the longest in the world without locks – with a normal end-to-end transit time of around 13 to 15 hours.
The canal is one of the main sources of foreign currency for Egypt.
It generated record revenue of $7 billion in 2021/22, up from $5.8 billion the previous fiscal year.
In July this year, the channel recorded its highest monthly revenue at $704 million, in addition to the highest monthly transit traffic and the highest tonnage.
In June, SCA began work on extending the two-way segment of the canal by 10 kilometers as part of the country’s plan to steadily improve the international waterway.
The second phase of the plan aims to widen and deepen a 30-kilometre segment of the canal by 40 metres.