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Indian Express
17-05-2025
- Business
- Indian Express
Suez Canal offers 15% discount to cargo ships: Will vessels return to the Red Sea route after US-Houthi ceasefire?
Egypt's Suez Canal Authority (SCA) is offering a 15 per cent discount from May 15 on transit fee to cargo ships of minimum 130,000 mt capacity, underscoring the impact that the Red Sea security crisis has had on the waterway critical to the shortest maritime route to the Mediterranean Sea and beyond from the Arab Peninsula, North-East Africa, and the Arabian Sea. 'The SCA has issued incentives and reductions of 15 per cent on the transit tolls of container ships of 130 thousand tonnes or more in net tonnage (loaded or in ballast) for 90 days,' said Admiral Ossama Rabiee, SCA chairman and MD after a meeting with the Italian Ambassador to Egypt, Michele Quaroni. Earlier, Rabiee also reached out to 25 major shipping line operators and maritime agencies, urging them to gradually return their vessels to the Suez Canal citing the positive development 'towards the return of navigation in the Red Sea'. This came three days after US President Donald Trump announced that Iran-backed Houthi militia had agreed to a ceasefire in the Red Sea. The Houthis maintained that Israel-flagged and -linked ships are not part of the agreement with the US, and they will continue to be targeted . In November 2023, Yemen-based Houthi rebels, backed by Iran, began targeting commercial vessels that they believed were linked to Israel and its key allies in response to its military offensive in Gaza. This crisis prompted the world's major container lines to divert their ships from the Red Sea route and navigate around the Cape of Good Hope. With much of the cargo movement rerouting away from the Suez Canal, its revenue crashed to around $4 billion in 2024 from $10.3 billion in 2023. 'This (discount offered) seems to be a move to bring the container ships, also called boxships, back to the Suez Canal. Bulk carriers and tankships were diverted from the Suez Canal, but these boxships were a major source of revenue for the SCA,' said Anil Devli, CEO, Indian National Shipowners Association. With the SCA offering steep discounts and the apparent calm in the Red Sea, even if fragile, the central question is: will vessels return to this key artery of global shipping and trade anytime soon? The Suez Canal accounts for nearly 12-15 per cent of global trade, according to IMF data. Nearly 30 per cent of global container traffic flowed through the Suez Canal before the Houthi attacks began. It is also a key passage for 8-9 per cent of global energy flows. As of May 11, 2025, Suez Canal's daily transit trade volume (TTV) stood at 484,137 mt, compared with 1,349,086 mt a year ago, shows data from PortWatch, a live conflict tracker maintained by the IMF and Oxford University. TTV denotes the total volume of goods transported through a shipping route. Daily TTV stood at 11,052,600 mt as of May 11, 2025 at the Bab el-Mandeb Strait, compared with 1,192,116 mt a year ago, according to PortWatch data. Daily TTV at the Cape of Good Hope moderated to 4,379,612 mt on May 11, 2025, from 5,761,366 mt a year ago. According to an analysis by the Federal Reserve Bank of St Louis, ports in East Asia and the Pacific, Europe and Central Asia, the Middle East and North Africa witnessed a decline in the amount of trade between October 20, 2023 and January 28, 2024 compared to the year-ago period. Shipping costs in the Suez Canal region soared 180 per cent during the period under consideration. 'As firms reroute shipments, the companies that continue to ship through the Suez Canal are likely raising prices to compensate for the higher risk, as well as to take advantage of the reduced shipping supply,' the Federal Reserve of St Louis said. Like various other countries, India was also heavily reliant on the Red Sea shipping route for exports to Europe, with nearly 80 per cent of the volumes going through the Suez Canal. The shifting of trade flows from the Red Sea to the route around Africa have evidently impacted Indian exporters by denting their margins as they now have to contend with higher freight rates for exports to Europe and beyond. With much of India's trade dependent on overseas shippers and foreign-flagged commercial vessels, there is little the country can do in the short term to shield itself from the impact of the Red Sea crisis. While the Red Sea security crisis hit traffic and revenue for the Suez Canal, it also led to higher shipping costs as vessels go around Africa, extending voyage durations—by 10-14 days—and fuel burn significantly, leading to higher freight rates. The longer voyages also made vessel availability tighter, again having an inflationary impact on freight rates. And for vessels still looking to transit the Red Sea, war risk insurance premiums skyrocketed, making the route unviable for most. To be sure, while freight rates have risen as ships chose to go around the Cape of Good Hope, shipping companies have mostly passed on the cost to the consumers, Devli said. During this time, the SCA's revenues crashed, while shipping lines were able to navigate the storm reasonably well, with global majors like Maersk reporting growth in revenue and profit on the back of higher freight rates and strong container demand. 'The Cape of Good Hope route has resulted in ship owners charging higher freight rates, as shown by the earnings of Danish shipping giant Maersk. The company's vessels will continue to sail around the Cape of Good Hope since the declaration of a ceasefire was not adequate,' Devli added. Given that the global shipping lines have adjusted rather well to the new normal of using the longer and safer route around Africa and still protecting—and even growing—their profits, there is little reason for them to return to the Suez Canal route till they are fully confident of the safety of their ships and crew. 'Even if the truce is a step in the right direction, I think many players will remain cautious until there's consistent evidence that navigation is truly safe,' Arturo Regalado, Kpler Insight Senior LNG and Natural Gas Analyst said. The Red Sea crisis has also hit liquefied natural gas (LNG) flows via Suez Canal which plummeted to 4.15 million tonnes in 2024 from 32.36 million tonnes in 2023 and 34.94 million tonnes in 2022 according to Kpler data. Meanwhile, LNG volumes going via the Cape of Good Hope increased by a little over five-fold from 11. 76 million tonnes in 2022 to 59.37 million tonnes in 2024. According to industry watchers, a key factor that is adding to shipping lines' hesitation is the fact that the Houthis are still likely to target Israel's ships and those headed for Israeli ports, potentially making the maritime route volatile and unsafe for other vessels in the region when such attacks or counter-attacks are underway. Sukalp Sharma is a Senior Assistant Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 13 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More
Zawya
15-05-2025
- Business
- Zawya
Egypt: SCA announces 15% transit fee discount for high-tonnage container ships
Arab Finance: The Suez Canal Authority (SCA) has announced a 15% discount on transit fees for container ships with a net tonnage of 130,000 tons or more for 90 days, starting May 15th, the authority's Chairman Ossama Rabiee announced. This step comes in response to calls from the SCA's clientele of container ship owners and operators. The decision encourages major shipping lines to return to transiting through the Suez Canal once more. Rabiee highlighted that the SCA is adopting an ambitious strategy to develop and enhance its system of maritime and logistical services provided to its clients. © 2020-2023 Arab Finance For Information Technology. All Rights Reserved. Provided by SyndiGate Media Inc. (
Yahoo
14-05-2025
- Business
- Yahoo
Suez Canal Offers 15% Rebates to Attract Shipping Back to the Red Sea
The Suez Canal Authority is pulling out all the stops to lure traffic back to the global trade artery. In an advisory listed Tuesday, the canal operator said it would grant a 15 percent rebate for all container ships that opt to transit the waterway if they have a net tonnage of 130,000 metric tons or above. More from Sourcing Journal Ocean Carriers Levy Surcharges, Cut Pakistan Port Calls Amid India Trade Embargo Maersk Expects No Cost Impact From Port Fees, Assures 'Unchanged' Service India-Pakistan Port Bans Trigger Delays, Rate Hikes and Capacity Crunch The rebates would begin to go into effect Thursday and would last 90 days. Container ships have largely avoided the Suez Canal since late 2023 after Houthi militants in Yemen began attacking commercial vessels with missiles and drones near the chokepoint. Ships sailing through the Red Sea, the Bab el-Mandeb Strait and the Gulf of Aden have all been targeted in that time frame, forcing ocean carriers like Mediterranean Shipping Company (MSC), Maersk and Hapag-Lloyd to instead divert their fleets south around Africa's Cape of Good Hope. The authority said it made the decision at the request of container ships' owners and operators, and 'in light of the current positive developments in the security situation' in the Red Sea and Bab el-Mandeb Strait. The positive developments refer to President Donald Trump's announcement that a ceasefire deal was made between the U.S. and the Houthis. Under this truce, the U.S. would stop hitting the Iran-aligned group with airstrikes in Yemeni territory, while the Houthis would stop attacking U.S. ships in the Red Sea. But the deal itself and potential terms are unclear, and haven't brought any certainty as to whether international ships in the waterway are exempt from Houthi attacks, or whether the onslaught will resume since the Israel-Hamas war in Gaza lingers. Egypt has plenty of financial incentive to coax more shipping companies into making a Red Sea return. In 2024, the Suez Canal saw $7 billion in losses due to the lack of traffic passing through. Admiral Ossama Rabiee, the chairman of the Suez Canal Authority, has championed the promise of a more stable canal since February, holding various meetings with shipping and maritime executives in the months since in an effort to get more carriers to return. The Houthis haven't attacked a container ship thus far in 2025, and the short-lived ceasefire between Israel and Hamas earlier this year had given way to the possibility that safety concerns would fade away. But by and large, most container shipping companies have not taken the bait, especially given the resumption of the hostilities in Gaza in March. And while the Houthis haven't hit any ships, they are still fighting an adjacent battle against Israel, and have refused to agree to stop attacking Israeli-affiliated vessels. Maersk has been the posterchild for staying noncommittal on a Red Sea return, with CEO Vincent Clerc saying in a Thursday earnings call that the company sees the situation lasting through 2025. 'Given what we're seeing every day…going through something as complex, costly and hard-to-reverse as a complete redeployment of our shipping networks to go back through the Red Sea, based on a news of a deal whose contour we don't understand—I think that is not responsible,' Clerc said. 'We're pretty far from that threshold.' The one major global container shipping line that has periodically made returns to the Red Sea is France-based CMA CGM, as the company has had select voyages escorted through the waterway by the French Navy. Last Wednesday, the authority noted in a news statement that CMA CGM ranked first in terms of net tonnage of container vessels transiting the canal during the first four months of 2025, representing 19 percent of tonnage during that period. In the first quarter, 486 container ships sailed through the Suez Canal, totaling 17,234 metric tons. During the meeting held that day, Christine Cabeau, CMA CGM's executive vice president of assets and operations, said the group already has a fixed service that transits through the canal. The group wants to operate an additional service, Cabeau said. 'On her part, Cabeau expressed her happiness with the positive developments in the security situation in the Red Sea region, which will be taken into consideration when the group assesses the situation in the region and prepares navigation schedules, taking into account maritime safety considerations for vessels and crews, as well as developments,' the Suez Canal Authority said in the statement. The EVP 'affirmed the group's keenness to return to transiting through the Suez Canal, considering it the shortest and fastest route compared to the Cape of Good Hope.'
Egypt Today
12-05-2025
- Business
- Egypt Today
President Sisi meets Chairman of Suez Canal Authority
CAIRO – 12 May 2025: President Abdel Fattah El Sisi met with Chairman of the Suez Canal Authority Admiral Ossama Rabiee, and CEO of the South Red Sea Shipyard Company, Mostafa El-Degeishy. Spokesman for the Presidency, Ambassador Mohamed El-Shennawy, stated that the President was briefed on developments in Suez Canal navigation, as well as ongoing efforts to maintain the standard of maritime and navigational services, despite current international and regional challenges. This includes the introduction of a package of new navigational services and the completion of projects to develop the canal's navigational course. In this context, the completion of the Southern Sector Development Project of the Canal, which commenced full operation in February 2025, was highlighted, along with the Ismailia Water Treatment Plant, the establishment of which has been finalized with a total capacity of 180,000 cubic meters. This is in addition to the introduction of new maritime units into service. The meeting also reviewed updates on various projects undertaken by the Authority and its affiliated companies, the activities of the Authority's Research Center, progress in the construction of new floating bridges, ongoing dredging operations in Bardawil Lake inlets, and the upgrading of fishing docks. The discussion also focused on efforts to modernize the Suez Canal Authority's maritime fleet through the acquisition of advanced new units to ensure sustained navigational efficiency and safety, while accommodating the increasing demands of global trade. Emphasis was placed on localizing the maritime industries to meet the needs of the canal's waterway and its surrounding areas. Moreover, the meeting also discussed a plan for the construction of deep-sea fishing vessels in Egypt harnessing advanced technology, with the aim of establishing an integrated system for fish harvesting, production, and packaging. The President stressed the importance of enhancing effective communication between the Suez Canal Authority and its clients and strengthening the strategic relationships with major shipping lines and relevant international organizations, particularly in times of crises. President Sisi gave directives to continue the development of maritime and navigational services in accordance with the highest quality standards and emphasized the need to maximize the canal's capacity as a key hub in global trade, while focusing on creating new jobs in the shipbuilding sector.
Zawya
07-02-2025
- Business
- Zawya
Suez Canal upgrades southern sector with new navigational charts
The Suez Canal Authority (SCA) has unveiled new navigational charts following updates made to the southern sector development project. The charts, which have been approved by the Egyptian Navy's Hydrographic Department (ENHD) and the British Admiralty, ensure that vessels transiting the Canal are equipped with the latest navigational data. Admiral Ossama Rabiee, chairman and managing director of the SCA, confirmed that all necessary measures have been taken to ensure vessels have access to the updated charts. These updates have been reflected in the Canal's Electronic Chart Display and Information System (ECDIS), while paper charts will also be available until new printed editions are released. Key updates include a 40-meter widening along the eastern bank of the Canal from km 132 to km 162, as well as the addition of a 10-kilometer section from km 122 to km 132 in the Small Bitter Lakes area. These changes improve navigation safety and ensure the readiness of the newly developed areas for operation. Canal widening and duplication Admiral Rabiee also announced the successful completion of the Canal duplication project in the Small Bitter Lakes area, which is now ready for full operation. This development follows the installation of navigational aids and the completion of pilot training at the Suez Canal Maritime Training and Simulation Academy. The southern sector development project is expected to enhance the Canal's competitiveness, attracting larger and more diverse ships, while increasing the safety and efficiency of transiting vessels. It is also expected to improve navigational safety for vessels with large drafts, especially after the Canal's 40-meter eastward expansion and a depth increase from 66 feet to 72 feet. Suez Canal's global position The project is a significant step in further cementing the Suez Canal's global leadership and increasing its accommodation capacity by 6 to 8 vessels daily. The expansion of the Canal's length by 10 kilometres also increases the New Suez Canal's total length to 82 kilometres. All rights reserved. © 2022. Provided by SyndiGate Media Inc.
