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Suez Canal Authority hikes toll, charge may hit shippers

Suez Canal reported 1,776 transits in January, an increase of 183 compared toJanuary 2021.

Suez Canal Authority hikes toll, charge may hit shippers
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The Suez Canal Authority (SCA) has decided to increase the canal tolls by up to 10 percent for both laden and ballast vessels transiting in north or southbound direction.

The hike was made "in line with the significant growth in global trade, the improvement of ships' economics, the Suez Canal waterway development and the enhancement of the transit service," SCA said in its circular.

While no carrier has mentioned about hiking rates, it kind of becomes obvious due to various other developments including geopolitical worries and increasing oil prices.

"Globalisation is a bit under siege now. With freight costs going up and up. Especially the Suez toll that hits all - and comes unexpected and only one month after the Feb 1 hike of 6 percent," says Peter Sand, Chief Analyst, Xeneta. "Risk premiums going up as well as sanctions being put up basically prevents most ships and goods from moving into the Ukraine and Russia Black Sea and Sea of Azov waters."

Suez Canal, owned and operated by Egypt, reported 1,776 transits in January 2022, a decline of 35 from last month but an increase of 183 compared to the same period last year.

Daily average thus worked out to around 57 transits, marginally up from last year.

Bulk (491), Container (470) and Tank (346) accounted for 74 percent of the transits in January 2022.

SCA had reported record-breaking revenue of $6.3 billion in 2021 compared to $5.6 billion in 2020. Over 1.27 billion tonnes of cargo were shipped through the canal, SCA chief Osama Rabie told news agencies earlier this week.

The canal accounts for roughly 10 percent of global maritime trade, and is a source of much-needed foreign currency for Egypt.

"Key crude producers such as Saudi Arabia, Russia, Iraq, the UAE, Azerbaijan, Kazakhstan, Norway, Kuwait, Libya, and Algeria, rely on the Suez Canal to export their crude,'' S & P Global Platts said in an update on the development. "Flows of petroleum products have also risen in recent years. Europe sends a sizable amount of naphtha to Asia every week, while large shipments of jet fuel and diesel come from Asia and the Middle East into Europe. The chokepoint is also critical for LNG. A hefty amount of Qatari LNG destined for European markets passes through the waterway. But Qatar has started to divert more cargoes to Asia in recent years."

The Ever Given story and the supply chain blues

The Suez Canal was blocked in March 2021 for six days after the grounding of Ever Given, a 20,000 TEU container ship. More than 350 ships were queuing to pass through the canal, blocking an estimated $10 billion worth of goods.

The container ship was refloated following a six-day salvage operation that involved a flotilla of tug boats and dredging vessels. One person was killed during the operation.

The SCA had initially sought a compensation of $916 million, which was later lowered to $550 million. The final settlement deals are yet to be revealed.

After the incident, the Egyptian government announced that they will be widening the narrower parts of the canal.

The supply chain worries that started last year have still not played out, and multiple headwinds keep pushing up freight rates - blockages at ports, full warehouses and Covid worries across the world.

Jyothi Shankaran

Jyothi Shankaran

Associate Editor, STAT Media Group. He has worked with IndiaSpend, Bloomberg TV, Business Standard and Indian Express Group. Jyothi can be reached at jyothi@statmediagroup.com


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