Ships carrying crude oil and petroleum products through the Suez Canal will pay a surcharge of 15 per cent of normal dues, up from the current five per cent, starting in May this year, the Suez Canal Authority (SCA) said this week as part of its revision of transit fees.
Empty crude oil and petroleum tankers transiting the canal in both directions will also pay a surcharge of five per cent of normal transit fees.
Additional charges on laden and empty liquefied natural gas (LNG) tankers, chemical tankers, and other liquid bulk tankers will double by up to 20 per cent. The extra tolls levied on laden and empty dry bulk vessels will increase to 10 per cent of normal transit dues, from five per cent currently, while other vessels will have to pay surcharges of 14 per cent, up from seven per cent at present.
The decision to raise the fees is related to “significant growth in global trade, the improvement of ship economics, the Suez Canal development, and the enhancement of the transit service,” the SCA said.
This is the second hike in fees that the SCA has enacted this year after it increased transit tolls for vessels travelling through the waterway by six per cent in February.
The hikes are related to dealing with the challenges of the Covid-19 and adopting appropriate pricing mechanisms and controls, taking into account the recovery and growth of global trade, according to a statement by the SCA.
It said the hikes were “subject to thorough follow-up and continuous evaluation, with the possibility of adjusting the rates or terminating them according to the changes taking place in the maritime transport market.”
The increases in fees are in line with the movement of the shipping market, maritime transport consultant Ahmed Al-Shami told Al-Ahram Weekly.
In mid-March, the authority cancelled the 15 per cent discount for LNG carriers passing through the Suez Canal that it had been granting since last November. The rebate has been cancelled entirely, with LNG carriers expected to pay full transit fees.
Al-Shami does not believe the moves will negatively affect the waterway, and he expects a further increase in the canal’s revenues, which hit an all-time high last year and recorded a historic $6.3 billion in 2021.
The Suez Canal is essential to the global shipping market, and the prices of the market have increased, Al-Shami said, adding that the tolls had not earlier increased since 2013. Meanwhile, global shipping rates have skyrocketed by more than 326 per cent, making the 15 per cent increase in surcharges a minimal one, according to Al-Shami.
“The Suez Canal is growing every year, with more ships and cargo loads going through, and it has the right to develop its resources just like other parties in the industry,” he said.
Prices have increased due to the Covid-19 pandemic and not the Ukraine war, which has mainly affected navigation in the Black Sea and the Arctic Sea, he said. Following the Russian invasion of Ukraine, SCA head Osama Rabie said the Suez Canal was an international waterway and neutral in international conflicts under the Constantinople Convention.
The convention was signed by the international powers including Russia in October 1888 and guarantees freedom of navigation in the Suez Canal.
The first article of the convention says that “the Suez Maritime Canal shall always be free and of commerce or of war, without distinction of flag. Consequently, the High Contracting Parties agree not in any way to interfere with the free use of the Canal, in time of war as in time of peace.”
The Suez Canal, the fastest shipping route between Europe and Asia, is one of Egypt’s main sources of foreign currency. It saw its largest ever annual net tonnage pass through in 2021 at 1.27 billion tons.
Work is currently underway to extend the two-way segment of the Suez Canal by 10 km as part of efforts to improve the international waterway.
*A version of this article appears in print in the 31 March, 2022 edition of Al-Ahram Weekly.