Egypt’s Suez Canal expects its annual revenue to increase by $700 million following an increase in transit fees in 2023, the canal authority’s chairman told CNBC Arabia on Sunday.
Osama Rabie also said the authority is planning to list shares for 10 per cent to 15 per cent of its subsidiary Canal Mooring and Lights Company on the Egyptian stock exchange by the end of this year. It is one of eight of the authority's subsidiaries.
On Saturday, Mr Rabie said that the Suez Canal Authority will increase rates for most vessels crossing the waterway by 15 per cent, and by 10 per cent for dry bulk ships and cruise ships, starting on January 1.
The increases are due to the rise in freight rates, energy prices and time charter rates per day, the authority said.
The hike was “inevitable and a necessity” in light of global inflation that reached more than 8 per cent, “which translates into increased operational costs and the cost of the navigational services provided in the canal”, Mr Rabie said in a statement on Saturday.
Average global inflation is forecast at 8.7 per cent this year, compared with 4.7 per cent last year, according to Euromonitor International.
In Egypt, urban consumer inflation rose to 14.6 per cent year-on-year in August, as it continues to struggle from the economic repercussions of the Russia-Ukraine war and soaring commodity prices.
About 10 per cent of global trade passes through the canal, a major source of foreign currency to the Arab world’s most populous country.
The transit tolls were determined based on a number of factors, including the high freight rates of container ships, compared to those recorded before the Covid-19 pandemic.
The authority expects navigational lines to achieve high operational profits in 2023 in light of the continued global supply chain disruptions, congestion in ports worldwide and “the fact that shipping lines have secured long-term shipping contracts at very high rates”, Mr Rabie said.
The increase in crude oil prices to more than $90 per barrel and average liquefied natural gas prices to above $30 per million thermal units have also led to a rise in the average prices of ship bunkers passing through the canal.
Daily charter rates for crude oil tankers increased on average by 88 per cent and LNG carriers by 11 per cent, compared to last year.
The Suez Canal remains the most efficient and least costly route compared to alternative routes, Mr Rabie said. It cuts the journey time between Asia and Europe by 15 days on average.
Annual revenue reached a record high of $6.3 billion in 2021 on the back of record tonnage and numbers of vessels transiting the canal.
Earlier this year, the authority raised transit fees and removed certain discounts, citing a rise in global trade and the need to expand the waterway.
Last month alone, the canal earned a revenue of nearly $745m with more than 2,120 ships passing through.