The Suez Canal Authority has announced plans to adjust transit fees for different vessel categories, with an upcoming 15% increase for petroleum and natural gas carriers and a 5% rise for dry bulk vessels. These changes are scheduled to take effect in mid-January 2024.
In a bid to maintain the Suez Canal’s economic viability, the adjustments encompass several vessel types, including crude oil tankers, petroleum derivative carriers, liquefied natural gas (LNG) carriers, liquefied petroleum gas (LPG) vessels, container ships, and passenger vessels. Dry bulk carriers and roll-on/roll-off ships will see a more modest 5% increase in their transit fees.
Notably, the fee increase won’t impact ships traveling from Northwestern European ports to destinations in the Far East, offering some relief for this specific route.
The Suez Canal’s significance as the “heart of global trade” is well-established, providing the shortest route between Europe and Asia and facilitating approximately 12% of global trade. Consequently, it holds a critical role in international commerce.
The Suez Canal’s revenue is a linchpin of Egypt’s economy, alongside income from expatriate remittances and the tourism sector. Recent reports suggest a record-breaking $9.4 billion in revenue for the Suez Canal in 2022, signifying a robust 34.7% growth compared to the previous year.
Osama Rabie, the chairman of the Suez Canal Authority, anticipates further growth, projecting a revenue target of $10.3 billion by the end of 2023. These promising figures align with the substantial upswing in shipping activity, evidenced by a 17.6% annual increase as 26,000 vessels navigated the canal during the last fiscal year.
This fee adjustment follows a precedent set by the canal’s authority, which previously introduced a 10% transit fee increase last year. Furthermore, in February of this year, the authority raised fees for crude oil and petroleum product tankers, escalating them from 15% to 25%, effective from April 1, 2023.
In 2021, the Suez Canal Authority unveiled an expansion plan for the 193-kilometer waterway, underscoring its enduring importance in global trade.
This fee adjustment, while significant for the shipping industry, is designed to sustain the canal’s operations and its pivotal role in global commerce. It will inevitably influence the dynamics of international trade in the coming year.
Photo (Reuters)
By: Montel Kamau
Serrari Financial Analyst
17th October, 2023
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