LONDON: 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 Mohammed Mursi is grappling with a slump in tourism and falling foreign currency reserves as it seeks to obtain a loan from the International Monetary Fund.
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 192km waterway as the quickest route between Asia and Europe. In May the Suez Canal Authority raised tolls on the canal by 2 to 5 percent, following an increase of 3 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, stabilise, or lower prices according to the global economy and other considerations.”
Tolls brought in around $5bn 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.
A standard container ship bringing consumer goods pays tolls of around $1.2m 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. The Suez Canal Authority has said it may offer discounts or rebates to increase traffic through the canal.Reuters
