Suez toll hike may force ships around cape: industry group
ReutersLONDON--The decision by Egypt's Suez Canal Authority (SCA) to raise toll fees could force ship owners, already battling a deep slump in their sector, to reroute vessels around the Cape of Good Hope, a major industry association said.
February 6, 2013, 12:03 am TWN
Tolls paid by ships using the strategic waterway are an important foreign currency earner for Egypt, bringing in around US$5 billion a year at a time when the country faces political unrest and economic turmoil.
“Most international ship operators are trading in the worst shipping markets in living memory due to there being too many ships chasing too few cargoes,” Peter Hinchliffe, secretary general of the International Chamber of Shipping (ICS), said on Monday.
“This is not the time for the SCA to be announcing increases, which for some trades seem very dramatic indeed, and which many shipowners will find impossible to pass on to their customers,” said Hinchliffe, whose association represents over 80 percent of the world's merchant fleet.
Canal officials could not be immediately be reached for comment.
The 192-km (120-mile) Suez Canal is the quickest sea route between Asia and Europe, saving an estimated 15 days of journey time on average.
“The effect of these increases will be to give a spur to those owners who may already be considering the cape route as a serious alternative,” said Hinchliffe.
The SCA said last week it would raise fees by between 2 and 5 percent starting on May 1. Last year tolls were raised by 3 percent for all ships passing through the canal starting March 2012. The SCA said at the time it had not raised fees in the three previous years.
“They (Egypt) are in desperate need of funds,” said Alan Fraser, Middle East analyst with security firm AKE. “Mostly because the IMF (International Monetary Fund) loan they are looking to get, they are waiting for agreement on that.”
Egypt's government signed a preliminary agreement for a US$4.8 billion loan from the IMF in November, but the formal signing was delayed due to political strife.
The ICS said the route around Africa via the cape was becoming relatively less expensive as ships have resorted to slow steaming — a method where ships slow their speed to cut fuel consumption.