Traffic volume through the Suez Canal were down 30 per cent between Jan 1 and Jan 11
Report by Bloomberg- Egypt pushed ahead with an increase in transit fees through the Suez Canal this week, as a need for foreign currency trumped a fall in maritime traffic due to Houthi attacks on shipping in the Red Sea.
Revenue for the North African nation from the vital waterway – the shortest route between Asia and Europe – have slumped as some ships avoid the canal to protect themselves from missile and drone assaults. But rather than delay the long-planned hike, Cairo is betting additional income from those still transiting will help the cash-strapped economy.
Canal authority head Osama Rabie, as the Iran-backed Houthis stepped up their attacks in response to Israel’s war against Hamas in Gaza, fuelling concerns of a wider military conflict.
“Because of security concerns, commercial ships may prefer longer routes than entering a war zone,” Rabie told a talk show on the MBC Masr TV channel late last week. “Even if I decreased tariffs, it won’t have an impact, because these are security fears.”
Egypt, which increased the fees on Monday (Jan 15), had also been working on expanding the waterway to bring in more revenue from what’s one of its prize assets. The Middle East’s most populous country is in talks with the International Monetary Fund over the possibility of at least doubling its current US$3 billion rescue package.
AP Moller – Maersk and Hapag-Lloyd are among the firms to have diverted ships, with some being rerouted around the tip of Africa – a far longer and costlier journey.
The Suez Canal Authority raised transit fees by as much as 15 per cent for some tankers, including those carrying crude oil and petroleum products, according to the October circular. Shipping company security concerns won’t be overcome with discounts or other incentives offered by the canal, Rabie said.
“The impact of the crisis on global navigation is big, slowing down supply chains,” Rabie said. “It reminds us of Covid. Ships are not moving and if they do they arrive late.”
Annual revenue from the canal reached US$10.25 billion in 2023, Rabie said, and if the situation continues, the figure will be “very affected” in the current year. That said, many ships are still going through the canal.
