Egypt cuts Suez Canal transit fees by half
Egypt’s government is offering potentially vast reductions on transit rates for container vessels in north ...
While the completed Suez Canal expansion project, set to be formally opened today with the MSC Genova expected to be at the head of the first southbound convoy though the new channel, will see greater efficiency for vessels transiting the waterway, the immediate impact on container supply chains serving Egypt itself is likely to remain muted.
Much of box traffic that comes in and out of North Africa’s largest economy is transported by feeder vessels, despite its location on the “highway” of the Asia-Europe trade, the world’s largest deepsea lane.
Maersk Line holds the largest share of Egyptian traffic, claims Mohammad Shihab, managing director of Maersk Line Egypt, Lebanon, Libya and Syria. It carries 16-17% of imports and exports, although he told The Loadstar that around 50% of that was on the company’s intra-Europe subsidiary,, Seago Line.
“The expansion of the canal will give all shipping lines the ability to deploy the biggest vessels and, with its location, they could obviously serve the Egyptian market – but then there is a need for the container terminals to accommodate bigger vessels,” he said.
While currently only the Suez Canal Container Terminal (SCCT) can simultaneously handle several ultra-large container vessels (ULCVs), and receives calls from three of the four main east-west deepsea alliances – 2M, O3 and G6 – its location on the east side of the canal means it has been effectively out of reach of Egyptian importers and exporters since the government closed the El Salam bridge just over two years ago.
Citing security concerns, the bridge – previously known as the Shohada 25 January Bridge, the Egyptian-Japanese Friendship Bridge and the Mubarak Peace Bridge – was closed to all road traffic in July 2013 and has yet to be reopened– meaning that the only land crossing for trucks calling at SCCT is hundreds of miles south, at Suez, where there is a tunnel between mainland Egypt and the Sinai peninsula, or via a string of ferries to Port Said West.
It is understood that authorities were concerned about the possibility of a car bomb being detonated on the bridge causing it to collapse while a vessel was passing underneath and thus closing the waterway.
After the closure, SCCT’s share of Egypt’s gateway traffic fell dramatically, the terminal’s chief executive Klaus Holm Laursen told The Loadstar.
“Our share of the local market had reached 13% in 2012 and was set to grow to over 20% in 2013 until the bridge was closed. It hit that part of our business really hard,” he said.
He added that SCCT has made numerous requests to security forces to consider running truck-only convoys from SCCT over the bridge, but so far there appears to be no change of mind.
It is ironic that at a time when the country is celebrating the canal expansion, the key to unlocking its real value to the local economy rests in a land link that is set to remain closed for an indeterminate amount of time.
As The Loadstar reported yesterday, the government plans to build six new tunnels linking Egypt and Sinai over the next two years.
Maersk Line’s Mr Shihab said that although before the bridge closure it had concentrated most of its traffic at SCCT, it had introduced three new calls at other Egyptian ports – Alexandria, Damietta and Port Said West – in the last 18 months.
SCCT had a 23% share of exports in 2012 and a 10% share of imports, which fell to 19% and 8% respectively in 2013, while Alexandria’s terminals had retained its 50% share of import-export market in the same period.
“These new calls coincided with the closure and were contingency planning for our customers who needed alternative to SCCT,” Mr Shihab said.
This had also included operating barge services between SCCT and Port Said West, which is located on the western side of the canal and although operating older equipment has retained market share from SCCT.
Of SCCT’s 3.4m teu throughput in last year, local traffic accounted for just over 400,000 teu.