New hike in Suez Canal fees
According to an official statement on Saturday, the SCA said that transit fees will increase by 15 percent for all types of vessels and 10 percent for dry bulk and cruise ships.
Osama Rabie, the chairman of the SCA, reasoned that the increase in fees for passing the canal "is inevitable and a necessity" in order to deal with the ramifications of the current global inflation rates that have reached more than 8 percent.
Global inflation has led to an increase in the costs of operation and maintenance of the canal as well as an increase in the cost of the navigational services provided to ships, Rabie explained.
The SCA has been monitoring "unprecedented" daily increases in charter rates for most types of vessels, according to the statement.
The authority forecasts a continuation in this trend in the coming year, it added.
Daily charter rates for crude oil tankers increased on average in 2022 by 88 percent compared to 2021.
Meanwhile, daily charter rates for LNG carriers increased on average in 2022 by 11 percent, compared to 2021.
Rabie explained that the most important factor in determining Suez Canal transit fees is the average freight rates for various types of vessels.
Freight rates, especially for containerships, have increased consecutively and considerably in recent months, reaching higher levels compared to the period during the COVID-19 pandemic, said the SCA chairman.
Rabie pointed out that "navigational lines will achieve high operational profits throughout 2023 in light of the continued impact of the disturbances in global supply chains and the congestion in ports worldwide, and also in light of the fact that shipping lines have secured long-term shipping contracts at very high rates."
He added that higher energy prices at the moment also impact the SCA's fees calculations.
He noted that, for example, the continued increase both in crude oil prices, which are now over $90 per barrel, and LNG prices, which are now above $30 per million thermal units, has led to a rise in the average prices of ship bunker.
This rise in energy prices increases the savings that ships achieve by transiting through the Suez Canal compared to other alternative routes, he noted.
The SCA takes into consideration "various changes in global economy by devising clear mechanisms to calculate transit fees for ships, which include the savings they will achieve by transiting through the Canal," he stressed.
The SCA increased the canal's transit fees twice this year - in February by 6 percent and in March by 5 to 10 percent.
The Suez Canal, which connects the Mediterranean and the Red seas, is the shortest maritime route between Asia and Europe and the fastest crossing from the Atlantic Ocean to the Indian Ocean.
The sea-level waterway, which ushers through around 12 percent of world trade, is also the longest in the world without locks - with a normal transit time from end to end of about 13 to 15 hours.
The canal is one of main sources of foreign currency for Egypt.
It brought in a record of $7 billion in revenues in 2021/22, up from $5.8 billion in the previous financial year.
In July of this year, the canal recorded its highest-ever monthly revenues at $704 million, in addition to the highest monthly transit traffic and highest tonnage.
In June, the SCA started work on extending the two-way segment of the canal by 10 kilometres as part of the country’s plan to regularly improve the international waterway.
The second phase of the plan aims to widen and deepen a 30-kilometre segment of the canal by 40 metres.