This canal is located in the eastern part of Egypt and connects shipping between Europe and Asia.
It has a traffic of about 50 ships per day, reaching a total of up to 18,829 during the year 2020. Its length is 163 kilometers and it accumulates 12% of world trade.
What is going to happen?
The Suez Canal Authority, the state entity that manages the maritime passage, has issued a statement announcing that it will increase rates by 15% for “all types of ships that transit during 2023”, with the exception of bulk carriers and tourist boats, in which case the increase will be 10%. This spike in rates comes in the midst of a supply crisis that has affected logistics chains around the world.
The president of that authority, Admiral Osama Rabine, described the measure as “a necessity in light of the increase in world inflation by 8%”, among other factors, such as the increase in the prices of crude oil, of Liquefied Natural Gas (LNG) and energy, as well as the rental costs of oil tankers and methane tankers, amonng others.
Rabine defended his entity’s policy that “follows a balanced and flexible marketing and pricing strategy to achieve the common interests of the authority and its clients”, and – he affirmed- “takes into account global economic conditions and their various variables”.
From when?
The note indicated that the decided increases will be applied as of next January and “during 2023”, although it underlined that “the strategy applied by the Canal Authority allows the tariffs to be revised in accordance with global economic conditions” and “the instantanous variables for each category of ships.
There are already several occasions in which the additional rates are increased between 5 an 15% so far this year, especially for the transport of fuel, taking into account the type of cargo of the ship or whether it is loaded or empty.
Despite the fact that at the end of last year it had assured that it would freeze the rates for gas ships, on March 1 it applied an increase of 7% for the passage of ships with liquefied petroleum gas and 10% for those with natural gas, and two weeks later eliminated the 15% discount that had applied to the latter for seven years. The new increases in transit fares come as the Egyptian economy in going through one pf ots worst moments in years, mainly due to the repercussions of the war in Ukraine.
What is happening in Egypt today?
The Egyptian currency has lost more than 22% of its value against the dollar since last March, while inflation shot up 40%, amid a drop in the country’s reserves in foreign currency, essential for importing food for its population, of more than 103 million inhabitants. The Suez Canal, one of Egypt’s mail sources of foreign currency income, brought in 7 billion dolars in fiscal year 2021-2022, the highest in its 153 year history, and an increase of 20, 7% compared to the previuos year (5,800 million dollars).
Transglory team
