No toll cuts at Suez Canal despite falling transits: ship agent

Egypt's Suez Canal plans no reduction in general transit fees to attract more traffic flows, ship agent Inchcape Shipping Services said Jan. 30, even as many ship operators have turned away from the key waterway for security reasons in recent weeks.

On Jan. 28, the Suez Canal Authority held a meeting with major shipping lines and agencies to discuss the ongoing Red Sea shipping crisis as Houthi rebels continued to attack merchants ships.

"During the meeting, it was unanimously agreed that the crisis is primarily political in nature, requiring a political solution to restore normal operations as soon as possible," said Inchcape, which participated in the meeting. "Reducing transit fees or offering rebates was deemed ineffective at this stage due to the perceived high risk in the Red Sea.

"However, it was suggested that reductions could be considered for special clients on a case-by-case basis," Inchcape said in a statement.

The Houthis, backed by Iran, have launched over 30 attacks on merchant ships around the Bab al-Mandeb Strait since mid-November.

With ships being diverted to take the longer Cape of Good Hope route, IMF Portwatch data showed daily transits at the Suez Canal fell to 41 on a seven-day moving average as of Jan. 28 from 74 on Nov. 1.

Before the crisis escalated, the canal authority announced hikes in transit tolls by 15% for oil, LPG and LNG tankers as well as containerships, and 5% for dry bulk carriers and general cargo ships. The increases went into effect Jan. 15 as planned.

Globally, 12% of trade volumes and 25% of container traffic pass through the Suez Canal, according to the canal authority.

The world's supply chains are facing rising shipping costs as shipping companies have either faced higher insurance expenses when transiting through the Red Sea or using more bunker fuels when opting for the Cape route, the canal authority said in a separate statement.

Plats assessed the container freight rate for shipping from Southeast Asia to East Coast North America at $6,500/FEU on Jan. 30, up from $2,300/FEU on Nov. 1, according to S&P Global Commodity Insights data.