Suez Canal Authority Offers 15% Discount To Attract Large Container Ships

The Suez Canal Authority (SCA) of Egypt has introduced a 15% transit fee discount for container vessels with a net tonnage of 13,000 metric tons or more, as the country works to bring back lost trade due to the ongoing Red Sea crisis.

The discount will apply for 90 days starting May 15 and will include both loaded and empty ships, according to the authority’s official statement issued on May 13.

The Suez Canal, which connects the Mediterranean Sea to the Red Sea, has faced a significant drop in traffic since late 2023 after Yemen’s Houthi group began targeting commercial vessels in the Red Sea and the Bab al-Mandeb Strait.

These attacks started after the outbreak of conflict between Israel and Hamas in Gaza in October last year. Though the Houthis claim to be blocking Israel-bound cargo in support of Palestinians, their actions have affected ships unrelated to the conflict, including those bypassing Israeli ports.

As a result, many shipping companies, including global players like Maersk, began avoiding the Red Sea route and started redirecting their vessels around the Cape of Good Hope, leading to higher fuel and insurance costs and longer travel times.

Due to this situation, revenue from the Suez Canal, one of Egypt’s main sources of foreign currency, fell sharply. In the fourth quarter of 2024, the canal brought in only $880.9 million compared to $2.4 billion in the same period of 2023.

Egyptian President Abdel Fatah al-Sisi previously stated that the country had lost approximately $7 billion in total because of the ongoing disruptions.

Last week, SCA Chairman Osama Rabie held a meeting with representatives from international shipping agencies, who requested temporary financial support to help reduce the cost burden on vessels operating in what is now considered a high-risk zone.

One of their main concerns was the sharp rise in insurance premiums for ships transiting through the Red Sea.

In response, the SCA introduced the new discount policy to support shipping companies and make the canal more attractive again. Rabie mentioned that the region was witnessing “relative stability and calm” in terms of security, and that current conditions were more favourable for trade through the canal.

The discount announcement came shortly after Oman mentioned a ceasefire agreement between the United States and the Houthi group. Under the deal, the US agreed to stop bombing Houthi positions in Yemen, while the Houthis agreed to halt attacks on US-flagged vessels.

However, the agreement did not include any commitment regarding Israeli ships.

Before the Red Sea attacks began, nearly 12% of the world’s maritime trade used the Suez Canal. Egypt now hopes the new incentive will help regain the trust of global shipping companies and encourage them to return to this critical waterway.

Reference: Reuters

Source: Maritime Shipping News