News / Economy

Shipping Firms Brace for Suez Disruption as Egypt Turmoil Mounts

FILE - An oil tanker passes through the Suez Canal in Ismailia, Egypt.
FILE - An oil tanker passes through the Suez Canal in Ismailia, Egypt.
Growing turmoil in Egypt is threatening to disrupt shipments through the Suez Canal and increase the costs for shipping lines as Cairo's cash-strapped government seeks ways of bringing in revenue.
Egypt's economy has been in crisis since the 2011 overthrow of Hosni Mubarak. The government of Islamist President Mohamed Morsi is grappling with a slump in tourism and falling foreign currency reserves as it seeks to obtain a loan from the International Monetary Fund.
“The government will try to generate some income in the short term through various creative surcharges - including, most likely, on transit fees through the Suez Canal. These measures will be counterproductive over the intermediate and long term,” said J. Peter Pham of U.S. think tank The Atlantic Council.
Rising costs will also hurt the shipping industry - now in the fifth year of one of the worst slumps on record - which relies on the 192-km (120-mile) waterway as the quickest route between Asia and Europe.
In May the Suez Canal Authority (SCA) raised tolls on the canal by two to five percent, following an increase of three percent in March 2012.
A spokesman for the authority said talk of another rate hike this year “will not happen”.
He added, “The system to announce tolls happens in the beginning of the year, so maybe in January there will be a decision to either raise, stabilize, or lower prices according to the global economy and other considerations.”
Tolls brought in around $5 billion annually in recent years, but revenues are falling due to reduced trade between Asia and Europe and a shift to bigger ships to save costs, resulting in less traffic.
“The rate hike earlier this year is simply not going to make up for overall revenue losses,” said Michael Frodl of U.S.-based consultancy C-Level Maritime Risks. “We think another rate rise is likely before the end of the year and could be applied almost immediately.”
A standard container ship bringing consumer goods pays tolls of around $1.2 million for a return trip through the canal, or around a quarter of the overall costs of a voyage between Asia and Europe, according to analysts' estimates.
Shipping industry sources say Cairo may turn to other charges to raise revenues.
A maritime security source active in Egypt said indirect surcharges were likely to be introduced, such as stepping up ship inspections for seaworthiness and checks on ships' security teams and weapons carried on board.
The Suez Canal Authority has said it may offer discounts or rebates to increase traffic through the canal. The security source said, however, “It is unlikely they will be able to act on it given the growing political and bureaucratic chaos internally.”
Protests ahead
Cities around Suez have already been flashpoints for violence this year, causing minor stoppages through the canal. Shipping sources say some vessels calling at Port Said also have experienced robberies in recent months.
Morsi faces nationwide protests on Sunday, the first anniversary of his inauguration, with opponents urging him to step down. Days of brawling between his supporters and the opposition have already left several people dead.
Egypt's military has said it will reinforce security around the canal ahead of Sunday's demonstrations.
“The Suez Canal is a main lifeline for us,” army spokesman Colonel Ahmed Ali said. “Protecting it is a responsibility for us toward the Egyptian people and toward the world.”
Klaus Holm Laursen of the Suez Canal Container Terminal said it planned to minimize any potential impact on customers.
Several shipping sources have said that if unrest escalates they may consider re-routing around the Cape of Good Hope.
“The smaller hassles and minor disruptions may also create unhappy costumers, and if [they are] not handled by the Suez Canal Authority, some owners may opt for avoidance of the canal,” Peter Sand, chief shipping analyst with trade association BIMCO, said.
“We can hope that the opponents of President Morsi understand the long-term economic implications of disrupting Suez Canal traffic. However, sometimes the logic of an uprising is not entirely fact-driven.”

You May Like

Guatemala Mudslide Death Toll Rises to 86

Death toll is expected to continue to rise as emergency crews dig through tons of earth for an estimated 350 people still missing More

Goodbye Pocahontas: Photos Reveal Today's Real Native Americans

Weary of stereotypes, photographer Matika Wilbur is determined to reshape the public's perception of her people More

Debris Found in Search for Missing Ship

Objects located Sunday have not yet been confirmed to be from the 240 meter container ship, El Faro, which disappeared in the eye of Hurricane Joaquin, according to US Coast Guard More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Russia’s Syria Involvement Raising Concerns in Europei
Luis Ramirez
October 02, 2015 4:45 PM
European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video Russia’s Syria Involvement Raising Concerns in Europe

European nations are joining the United States in demanding that Russia stop targeting opposition groups other than the Islamic State militants as Russian warplanes continue to conduct raids in Syria. The demand came in a statement from Britain, France, Germany, Qatar, Saudi Arabia, Turkey and the United States Friday. VOA Europe correspondent Luis Ramirez reports.

Video First Self-Driving Truck Debuts on European Highways

The first automated semi-trailer truck started its maiden voyage Friday, Oct. 2, on a European highway. The Daimler truck called 'Actros' is the first potentially mass-produced truck whose driver will be required only to monitor the situation, similar to the role of an airline captain while the plane is in autopilot mode. VOA’s George Putic reports.

Video Nano-tech Filter Cleans Dirty Water

Access to clean water is a problem for hundreds of millions of people around the world. Now, a scientist and chemical engineer in Tanzania (in East Africa) is working to change that by creating an innovative water filter that makes dirty water safe. VOA’s Deborah Block has the story.

Video Demand Rising for Organic Produce in Cambodia

In Cambodia, where rice has long been the main cash crop, farmers are being encouraged to turn to vegetables to satisfy the growing demand for locally produced organic farm products. Daniel de Carteret has more from Phnom Penh.

Video Migrant Influx Costs Europe, But Economy Could Benefit

The influx of hundreds of thousands of refugees and migrants is testing Europe’s ability to respond – especially in the poorer Balkan states. But some analysts argue that Europe will benefit by welcoming the huge numbers of young people – many of them well educated and willing to work. Henry Ridgwell reports from London.

Video Botanists Grow Furniture, with Pruning Shears

For something a bit out of the ordinary to furnish your home, why not consider wooden chairs, crafted by nature, with a little help from some British botanists with an eye for design. VOA’s Jessica Berman reports.

Video New Fabric Helps Fight Dust-Related Allergies

Many people around the world suffer from dust-related allergies, caused mainly by tiny mites that live in bed linen. Polish scientists report they have successfully tested a fabric that is impenetrable to the microscopic creatures. VOA’s George Putic has more.

Video Burkina Faso's Economy Deeply Affected by Political Turmoil

Political turmoil in Burkina Faso over the past year has taken a toll on the economy. The transitional government is reporting nearly $70 million in losses in the ten days that followed a short-lived coup by members of the presidential guard earlier this month. The crisis shut businesses and workers went on strike. With elections on the horizon, Emilie Iob reports on what a return to political stability can do for the country's economic recovery.

Video Fleeing Violence, Some Syrians Find Refuge in Irbil

As Syrians continue to flee their country’s unrest to seek new lives in safer places, VOA Persian Service reporter Shepol Abbassi visited Irbil, where a number Syrians have taken refuge. During the religious holidy of Eid al-Adha, the city largely shut down, as temperatures soared. Amy Katz narrates his report.

Video Nigeria’s Wecyclers Work for Reusable Future in Lagos

The streets and lagoons of Africa's largest city - Lagos, Nigeria - are often clogged with trash, almost none of which gets recycled. One company is trying to change that. Chris Stein reports for VOA from Lagos.

Video Sketch Artist Helps Catch Criminals, Gives a Face to Deceased

Police often face the problem of trying to find a crime suspect based on general descriptions that could fit hundreds of people in the vicinity of the crime. In these cases, an artist can use information from witnesses to sketch a likeness that police can show the public via newspapers and television. But, as VOA’s Greg Flakus reports from Houston, such sketches can also help bring back faces of the dead.

Video Thailand Set to Build China-like Internet Firewall

Thai authorities are planning to tighten control over the Internet, creating a single international access point so they can better monitor content. VOA Correspondent Steve Herman reports from Bangkok on what is being called Thailand’s own "Great Firewall."

Video Croatian Town’s War History Evokes Empathy for Migrants

As thousands of Afghanistan, Iraqi and Syrian migrants pass through Croatia, locals are reminded of their own experiences with war and refugees in the 1990s. VOA's Daniel Schearf reports from the town of Vukovar, where wartime scars still are visible today.

Video Long Drought Affecting California’s Sequoias

California is suffering under a historic four-year drought and scientists say even the state's famed sequoia trees are feeling the pain. The National Park Service has started detailed research to see how it can help the oldest living things on earth survive. VOA’s George Putic reports.

VOA Blogs

World Currencies


Rates may not be current.