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.
Reuters
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

Ukraine: Mysterious 'Roaming Tank' Reportedly Takes Aim at Smugglers

Ukraine's TV, print media, Facebook abuzz with reports a 'roaming tank' is on the loose, destroying vehicles of those involved in smuggling More

US Wildlife Service Begins Probe of Killing of Cecil the Lion

Minnesota man accused of killing beast is in hiding, has been asked to contact US officials; White House to review extradition petition More

Video Kerry Tour Will Cover Security, Iran Nuclear Deal

US secretary of state to visit 5 countries in the Middle East, South Asia in bid to strengthen economic and security ties, ease concerns over deal with Tehran More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Booming London Property a ‘Haven for Dirty Money’i
X
July 29, 2015 9:34 PM
Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.
Video

Video Racially Diverse Spider-Man Takes Center Stage

Whether it’s in a comic book or on the big screen, fans have always known the man behind the Spider-Man mask as Peter Parker. But that is changing, at least in the comic book world. Marvel Comics announced that a character called Miles Morales will replace Peter Parker as Spider-Man in a new comic book series. He is half Latino, half African American, and he is quite popular among comic book fans. Correspondent Elizabeth Lee reports from Los Angeles.
Video

Video Historic Symbol Is Theme of Vibrant New Show

A new exhibit in Washington is paying tribute to the American flag with a wide and eclectic selection of artwork that uses the historic symbol as its central theme. VOA’s Julie Taboh was at the DC Chamber of Commerce for the show’s opening.

VOA Blogs

World Currencies

EUR
USD
0.9066
JPY
USD
123.75
GBP
USD
0.6394
CAD
USD
1.2954
INR
USD
63.904

Rates may not be current.