Suez Canal cuts transit fees by 15% to lure container ships back

Suez Canal (Photo: Shutterstock/Phaata)

Egypt has announced a 15% reduction in transit fees for the next three months for container ships with a capacity of around 13,500 TEUs or more, in a bid to encourage shipping lines to return to the Suez Canal as the Red Sea shipping crisis appears to be easing.

The Suez Canal Authority (SCA) said the offer was in “response to requests from containership owners and operators, and in light of recent positive developments in the security situation in the Red Sea and Bab al-Mandab Strait.”

As the security crisis escalates, particularly following attacks by Yemeni Houthi forces on commercial vessels in support of Hamas in its conflict with Israel, much of the international commercial fleet – especially container ships – has avoided the area. As a result, revenues from transiting the Suez Canal have more than halved over the past year.

US President Donald Trump announced last week that the shipping crisis in the Red Sea that has lasted more than 17 months is coming to an end. Speaking at the White House, he said the Houthis had agreed to stop attacking ships and the US would also end airstrikes against them. Trump’s statement was confirmed by the foreign minister of Oman, who acted as a mediator. However, Houthi forces have continued to fire missiles at Israel, prompting a military response from Tel Aviv.

Most major container lines questioned in recent earnings calls maintained the view that it was too early to resume Red Sea sailings.

Maersk CEO Vincent Clerc last week stressed that a return to the Red Sea route based on a vague ceasefire would be “irresponsible,” warning that the region remains too volatile to be safe.

“I would not think a 15% discount would have any meaningful impact on the decision on whether or not to transit the Red Sea under the present circumstances,” Lars Jensen, CEO of consultancy Vespucci Maritime, told Splash.
 “That decision will be based on a risk assessment.”

Analysts at investment bank Jefferies echoed the sentiment in a note to clients last week: “Given the fast-changing news flow in the current climate, we do not expect a rush to return to normal Red Sea transits given the risks.” The report also noted that the container shipping industry would be the most vulnerable to any market changes once the Red Sea returns to normal.

Jefferies estimates that the recent diversions have reduced global shipping capacity by 11-12%, and this is the key factor that makes the difference between a “healthy” market and one where shipping lines have little pricing power.

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Source: Phaata.com (According to Splash247)

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