Suez Canal increases transit tolls, putting pressure on global supply chains

While the shipping industry is still recovering from the crisis from the Ever Given incident, the Suez Canal increasing 6% in transit tolls. Suez Canal

Container ships pass through the Suez Canal

Container ships pass through the Suez Canal (Image: Istock)

The Suez Canal Authority (SCA) is increasing the transit tolls it charges for ships passing through the vital waterway, in a move expected to put more inflationary pressure on the global supply chain.

The Suez Canal Authority will seek to capitalize on the recovery in goods trade by increasing transit fees across the Suez canal by 6% from February 2022, 11 months after the Suez canal was blocked for nearly a week by the container ship Ever Given. About 12% of international trade flows through the canal, which is the shortest maritime route between Asia and Europe.

The Suez Canal Authority has benefited from the recovery of economies since the first wave of coronavirus lockdowns was lifted. The agency cites an International Monetary Fund and World Trade Organization as forecasting that global trade traffic will grow by 6.7% in 2022, which means "good profits" for businesses of shipping lines.

The fee increase will not apply to ships carrying liquefied natural gas. Cruise ships will also be excluded as the sector has experienced a deeper shock than others from the pandemic.

"The tourism and travel sector has suffered major losses worldwide, including cruise ships and sea yachts, and is expected to complete its recovery by 2022," the agency said.

Last month, the canal recorded its highest monthly output in history, at 112.1 million tonnes. A total of 1,847 ships passed through the canal in October, 14% more than a year ago.

The canal authority also reported record revenue for the past financial year, despite a six-day bottleneck after the 220,000-ton Ever Given ran aground in March. Revenue rose to $5.84 billion in the 12 months to June 30 as strong commodity demand spurred a recovery in trade.

Shipping companies also benefited from this recovery. Maersk, the world's largest container shipping group, posted its most profitable quarter ever this week. Maersk also predicts the global supply chain crisis will continue to play out next year, with shortages of port workers and truck drivers causing disruption.

According to George Lawrie, vice president and principal analyst at research firm Forrester, the global shipping industry is still recovering from the disruption caused by Ever Given.

“Since the pandemic, changes in consumption and shopping patterns, including a surge in e-commerce, have already increased import demand for container shipments of consumer goods to North America and Europe. In addition, new markets for Asian manufactured goods require more ships for a weekly service, which in turn means yet more containers on the high seas,” he said this week.

“Compounding the problem, the global container circulation had still not recovered from the recent Suez canal blockage.”

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Source: Phaata.com (According to The Guardian)

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