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Suez Canal Regulations on Tolls

By: Hany Maamoon

suez-map

In 1869 The Suez Canal was opened to international trade and since then it was recognized as one of the most important commercial shipping lanes in the world because of its privileged geographical location amid the world. The Canal is located in the middle of three continents and mainly facilitating the growth of the trade flow between Asia and Europe by reducing the lengthy distances vessels traveled around the “Cape of Good Faith” by almost 25% or more in cases countries having ports on the Mediterranean.

The Suez Canal overall length is almost 193.30 Km, 113.3 Km of which are now fully double path. The Canal depth is 24 meters, which allows it to accommodate vessels of 66 feet draught and dead weight of 240,000 tons, which means that all triple E Class container ships can safely transit through the canal in laden condition. Even, semi-loaded super tankers became a permanent client of the Suez Canal after the establishment of SUMED pipe line, Closure of the Suez Canal and the SUMED Pipeline would divert oil tankers around the southern tip of Africa, the Cape of Good Hope, adding approximately 6,000 miles to transit, increasing both costs and shipping time. According to the International Energy Agency (IEA), shipping around Africa would add 15 days of transit to Europe and 8-10 days to the United States.

The Canal is operated through the Suez Canal Authority (SCA) which is an independent governmental authority enjoying absolute powers through the Canal. This brings us to the Suez Canal tolls; the SC transit tolls are calculated in SDR on basis of the Suez Canal Net Tonnage (SCNT).

The Suez Canal Authority has set a constant coefficient for each type of vessels that differs depending on each vessel’s SCNT and also in case the vessel is in ballast or laden condition.

The SCA is trying to adopt a commercial approach striving towards adding new clients and maintaining the old ones and hence is taking into account when calculating the canal tolls, that in some cases towards saving costs, it would be more beneficial for vessels to pass around the cape of Good Hope instead of transiting the Suez Canal.

On the contrary, additional dues are to be levied upon special types of ships such as the container ships depending on the number of tiers of boxes loaded on deck. For example northbound vessels will be paying a surcharge of 2% from the Suez Canal dues for having one tier and this ratio goes up gradually till 18% for vessels carrying seven tiers above deck to be increased by 2% for each extra tier above the seventh. A different tariff is given to southbound vessels.

In order to shed the light on the SC tolls with respect to container ships, we have taken the liberty of giving hereunder some examples for various models of container ships as follows:

chart-sm

The below table also shows how the Suez Canal dues coefficient is calculated depending on the type of vessels and her SC tonnage and whether laden on in ballast.

table

 

The SCA has adopted various strategies in order to cope with changes in the market conditions and to attract more vessels to transit the canal. One of those measures is offering a reduction of about 20 % to VLCC’s – of 200.000 DWT and above in ballast, coming from the Gulf of Mexico, the Caribbean and the North Coast of South America.

A reduction of 25% of the original transit dues is granted to LNG vessels under certain conditions in order to encourage LNG carriers to transit the Canal.

The said reduction has proved to be efficient over the years as the quantities of LNG transiting through the Suez Canal has been gradually increasing since 2008, with the total number of laden tankers increased from 210 to over 500, and the volume of LNG carriers traveling northbound (laden LNG carriers) increased nearly six-fold.

Southbound LNG transit mainly originated from Algeria and Egypt, destined for the Asian markets while northbound transit is mostly from Qatar and Oman, destined to European and North American markets. The rapid growth in LNG flows over the years represents the startup of five LNG trains in Qatar in 2009-2010. In 2010, countries like the United Kingdom, Belgium, and Italy received over 80 percent of their total LNG imports via the Suez Canal, while Turkey, France, and the United States had about a quarter of their LNG imports on LNG carriers, which transited the Suez Canal.

chart

One of the polices adopted by the SCA in order to encourage ships taking more economical alternative routes to transit the Canal, is granting such vessels what is called a long haul rebate which in some cases could reach 70% of the original Suez Canal dues provided that the vessel will not stop at any port for carrying out any cargo operations during the long trip. Other rebates are also granted to dry bulk carriers that make round trips between ports of the east coast of the Americas and the Caribbean Zone heading to (or coming from) ports of Indian Sub-continent and Asian Countries east of India.

Similar long haul rebates for container ships coming from east coast of America starting from port of Charleston and its southern ports heading to south east of Asia, (port of Port Kelang and its eastern ports) is also granted to vessels taking such route provided also that the vessel has not stopped in any mid-port during the journey for carrying out cargo operations. But in cases of container ships the reduction granted is mainly concerned with the surcharge levied upon the on deck boxes and not the original canal dues. For example; ships carrying containers up to 6 layers on deck, shall be charged with an additional dues of 2% for these layers whereas, in normal cases such surcharge would be 16% for example, which means that the reduction granted is nearly 14% of the surcharge.