This came shortly after their last hike in November 2021 at 6 per cent
It would be natural for everyone to ask SCA if they are serious about their back-to-back toll hikes. Granted the route is the shortest between Asia and Europe, SCA is increasingly putting its credibility on the line with inappropriate duties.
Additional US$400 million revenue per year
The canal earned itself a bad name after a fiasco which caused a global shipping chaos. After the SCA took 1 week to free the wedged Japanese-owned Ever Given vessel to let traffic pass, the next thing they embarked on was having someone pay for the losses suffered. The compensation haggling concluded with an undisclosed sum to release the mammoth vessel.
Today, chartering has become so expensive that companies with lower-value commodities could not afford to import or export anymore. Vessel operators reportedly have no extra ships to meet a high volume of freight demand, equipment were in short supply or could not be quickly repositioned where needed, and destination ports were badly congested. The backlog added weeks of delay for major export trades from Asia, worsened by bouts of weather- and COVID-related events, including operational mishaps.
The SCA announced the 10 per cent toll hike to take effect from 1 March 2022. The only vessels lucky to be exempted from this duty are the cruise ships and LNG carriers. Most vessel types will see increases of 5-7 per cent in both directions. Chemical, liquid bulk tankers and LPG tankers will see the biggest hike at 10 per cent. The changes apply to both laden and unladen ships. This move is expected to bring SCA an annual revenue US$400 million.
According to the SCA, the decision was aligned with the significant growth in global trade, the improvement of ships’ economics, the Suez Canal waterway development and the enhancement of transit service. The authority added the pricing strategy takes into account global economic conditions and will ensure the waterway can maintain navigational services while also keeping its competitive edge compared to alternative routes.
By waiving for LNG carriers, it suggested the SCA is supportive of net zero goals by encouraging green fuel-powered vessels. On the other hand, was this US$400 million an attempt to make up for the shortfall it failed to get in compensation from last year’s Ever Given incident? Taking the speculation a notch higher, is the SCA raising funds for its canal widening project?
Marine Online News Team
Please email us at firstname.lastname@example.org to contact the author for this article.