By Tham Soon Seong
PENANG, Oct 22: Freight charges are likely to rise, especially on raw materials and intermediate goods, by three to five percent on the cost, insurance, and freight (CIF) of the goods, following the Suez Canal’s proposal to increase the transit fees for ships passing the canal.
The Suez Canal Administration ( SCA) recently announced that transit fees shall be increased by 5 to 15 percent by January 14, 2024.
The increase of 15 percent will be levied on tankers with crude oil, gas, LPG, as well as container and cruise vessels, while Ro-Ro and general cargo vessels will see 5 percent increase in transit fees.
What could the impact be on these increases?
Major conference vessels would most likely levy the similar increase in freights via a devise known as “Suez surcharge”. Previously, due to currency fluctuation and increases in fuel prices, surcharges such currency adjustment factor ( CAF) and bunker adjustment factor ( BAF) were imposed ; thus as a result of the transit fees increases, freight charges are bound to increase, especially on raw materials and intermediate goods, says an industry player.
The 150- year old canal, which covers a distance of 120 miles is expected to bring in at least
US$9 billion revenue to Egypt’s income, around 2 percent of Egypt’s Gross Domestic Product (GDP).
The canal sees an average of 50 crossings daily or 20,000 crossings yearly and is one of Egypt’s major income sources.
–WE