Suez Canal Raises Tolls Twice, By Up to 20%

The Suez Canal has raised tolls twice within a month, and ocean freight rates are likely to rise again in the second quarter.

On March 22, the Suez Canal Authority announced that it will increase the tolls of various ships in the Suez Canal by up to 20% from May 1. This is the second increase in tolls after the increase announced in early March. 

Earlier on March 1, the authority had raised tolls for some ships. Among them, the tolls of liquefied petroleum gas carriers, chemical carriers and other tankers will be increased by 10%; the tolls of vehicles and natural gas carriers, general cargo ships and multi-purpose ships will be increased by 7%; the tolls of oil tankers, crude oil carriers and dry bulk carriers will be increased by 7%. 5% increase.

Regarding this increase, the authority said that the new price increase is a revision to the increase in the surcharge imposed on ships in March. The increase in toll is to reflect the substantial increase in global trade and to improve the construction and services of the canal waterway. According to the authority's announcement, the price increase will take effect from May 1, but the rate of increase may be adjusted or cancelled depending on changes in the global shipping market. Among them, a 15% general toll for oil tankers will be added, which is 5% higher than the current fee.

This adjustment:

The surcharge for chemical tankers and other liquid bulk carriers will increase from 10% to 20%,
The surcharge for fully loaded and ballasted dry bulk carriers will increase to 10%.
The surcharge for cars and general cargo ships, heavy cargo carriers and multi-purpose ships has increased from 7% to 14%.
For oil tankers equipped with ballast water treatment systems, the toll rate to be charged remains unchanged at 5%.
The industry pointed out that due to the current market performance, which belongs to the seller's market, the effect of the price increase in the first quarter of the Suez Canal has already appeared. After this price increase, the shipping company will transfer the increased cost to the cargo owner, which will be reflected in the freight rate in the second quarter.

It is worth noting that due to the impact of the Russian-Ukrainian crisis, the freight rates of the three major long-haul routes, including the US-West, US-East and Europe routes, have continued to decline in recent months, with the most obvious decline in the freight rates of the Europe route. However, the current overall freight rate is still higher than before, showing that the market is still in short supply, which is beneficial for shipping companies to pass on the increased costs to cargo owners.