Bangalore: A toll increase of as much as 5% by the authority that owns and maintains the Suez Canal, one of the world’s busiest shipping lanes, may raise the cost of transporting goods into and out of India.
For all but the smallest ships, the Suez Canal toll increases range from about 3-5% according to capacity and ship type. The move follows an across-the-board increase of 3% that was implemented in March last year. The toll increase will come into force from 1 May, Ahmed Mohamed El Manakhly, a director of transit department at the Suez Canal Authority, wrote in a 31 January circular.
“India’s trade (exporters and importers) will be impacted because a significant share of the country’s external cargo is shipped via the Suez Canal,” said Anil Devli, chief executive officer of Indian National Shipowners’ Association (INSA), a local lobby.
The Suez Canal is an artificial sea-level waterway in Egypt connecting the Mediterranean Sea and the Red Sea and allows transportation by water between Europe and Asia without navigating around Africa.
It provides the shortest maritime route between Europe and the lands lying around the Indian and western Pacific oceans. The canal is extensively used by modern ships as it is the fastest crossing from the Atlantic Ocean to the Indian Ocean. Tolls paid by ships represent an important source of income for the Egyptian government.
The International Chamber of Shipping, the biggest global trade association of ship owners, said the increase in toll rates could force fleet owners to take the longer route via the Cape of Good Hope.
“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. This is not the time for the Suez Canal Authority to be announcing increases, which for some trades seem very dramatic indeed, and which many ship-owners will find impossible to pass on to their customers,” said Peter Hinchliffe, secretary general of International Chamber of Shipping.
“With pressure on Egypt’s tourism and its other economic problems, there is increased pressure on the Suez Canal Authority to maintain what is now the country’s biggest source of foreign revenue. But the effect of these increases will be to give a spur to those fleet owners who may already be considering the Cape route as a serious alternative,” he said.
The route via the Cape of Good Hope is already becoming relatively less expensive as many ships resort to slow steaming in an effort to reduce costs and to deliver the reductions in CO2 emissions which are now demanded by their customers, according to the International Chamber of Shipping.