Suez Canal Authority Announces 15% Discount on Container Ship Transit Fees Amid
Suez Canal Cuts Transit Fees Amid Security Concerns
The Suez Canal Authority has announced a significant 15% reduction in transit fees for container ships weighing 130,000 tons or more. This temporary measure, effective for 90 days starting next Thursday, aims to encourage major shipping lines to return to the canal amidst ongoing security disruptions in the Red Sea. The decision follows a notable decline in canal revenues, which plummeted from $8.8 billion to $6.6 billion by the end of the last financial year.
Red Sea Tensions Continue to Impact Suez Canal Traffic
Lieutenant General Ahmed Rabea, Chairman of the Suez Canal Authority, explained that the fee reductions were prompted by a shift in shipping routes, with many companies opting for the longer journey around the Cape of Good Hope. This change has been largely attributed to security concerns stemming from Houthi attacks in the Red Sea. Although there was a brief uptick in shipping activity in March, it fell again in April due to ongoing threats, despite a decrease in the frequency of attacks in recent weeks.
Rabea noted that the last recorded Houthi attack on vessels occurred on December 2, and since then, no new incidents have been reported. He emphasized that a truce in Gaza could significantly stabilize the situation in the Red Sea, potentially restoring normal shipping operations. The Suez Canal Authority is actively working on providing incentives to attract ships back to the canal, compensating for the losses incurred from rerouting.
Additionally, Rabea discussed ongoing development projects aimed at enhancing the canal’s infrastructure. He highlighted the challenges faced in dredging the southern sector of the canal, which has not seen maintenance since 1990. Despite these challenges, he assured that navigation would not be affected, as the project is set to be completed over three years.
U.S. Ships Continue Normal Passage Through Suez Canal
In light of recent discussions regarding U.S. ships’ passage through the canal, Rabea clarified that no special privileges are granted to any country. The fee reductions apply universally to all vessels, ensuring that no ship, including those from Egypt, passes through the canal without incurring transit fees. He confirmed that U.S. ships continue to transit the canal under the same standard fees and procedures as all other vessels.
Last week, Rabea met with representatives from shipping agencies who expressed the need for temporary incentives to offset increased insurance costs associated with navigating the high-risk Red Sea. Egyptian President Abdel Fattah el-Sisi previously noted that regional tensions had resulted in a revenue loss of 50-60%, amounting to over $6 billion last year. Recent data from the Central Bank of Egypt revealed that Suez Canal revenues fell to $880.9 million in the fourth quarter of last year, a significant drop from $2.4 billion the previous year, largely due to the impact of Houthi attacks.
