The political and economic turmoil in Egypt has caused the Government to raise Suez Canal fees for oil and petrochemical shipments. The attached article analyses the move and its consequences in detail.
DUBAI (ICIS)–Egypt’s Suez Canal Authority (SCA) has raised toll fees by 5% for oil tankers and vessels carrying petrochemicals, while a smaller increase of 2% will apply to container ships and car carriers, a spokesperson of the government agency said on Friday.
The new fees took effect May 1 as the Egyptian government seeks ways to boost revenue and prevent a currency crisis. Last year, Egypt had increased tolls on the waterway by 3%.
“The increase in toll is in place and we feel the hike is not that big to the point that would make shippers leave the Suez Canal,” said SCA spokesman Tarek Hassanein.
The canal, which links the Mediterranean Sea and the Gulf of Suez, is the quickest sea route between Asia and Europe, saving an average 15 days on a voyage.
Prior to the implementation of this year’s toll increase, the International Chamber of Shipping had warned that added expense might cause financially strapped ship operators to seek alternate routes.
“The decision to raise fees was based on several recent studies conducted by the SCA on marine traffic and toll revenues,” Hassanein said.
The waterway is one of the Egypt’s main sources of foreign currency revenues, along with tourism, oil and gas exports, and remittances from expatriates.
Suez Canal revenues have become more important because the country’s foreign currency reserves have shrunk to $13.5bn (€10.4bn) currently, from $36bn on the eve of the 25 January Revolution.
Egypt received $398.5m in revenues from the Suez Canal in March.
In 2012, the number of container ships using the canal fell 12% to 6,332. A total of 17,225 ships of all types travelled the link last year, according to a latest data by SCA.
Meanwhile, freight rates for the Middle East and North Africa (MENA) region-to-Asia route declined in the past few weeks as spot trading activities have been subdued given an underlying weakness in demand for chemical cargoes, shipping sources said.
In an attempt to encourage purchases of chemicals, shipowners have indicated willingness to fix cargoes at lower costs, they said.
On Friday, freight rates for a 10,000-tonne vessel from the Middle East to China are at $49-53/tonne, while those for same-sized vessel heading to India from the Middle East are at $30-33/tonne.
Shipping activities, however, may see a slight improvement towards July, before the Muslim fasting month of Ramadan. Demand for chemical and crude products from MENA to India, Pakistan and southeast Asia typically picks up ahead of Ramadan.
The full article is visible via the link below – by Pankaj Oswal