The Suez Canal is going to be reduced!

On May 13, local time, the Egyptian Suez Canal Authority issued a statement saying that it would provide a 15% transit fee discount to large container ships from May 15.

The Suez Canal is one of the most important shipping channels in the world. Before this Red Sea crisis spread, the canal undertakes about 10% of global maritime trade and about 30% of container transportation, which is crucial to international trade. After the outbreak of the Red Sea crisis, international shipping companies regarded the Red Sea waters as high-risk routes and detoured them one after another. The traffic volume and toll revenue of the Suez Canal have dropped significantly.

It is worth noting that in the A-share market, the port shipping sector has risen for many consecutive days. On May 14, the sector index rose by more than 4%, and more than 10 individual stocks including COSCO Shipping, Ningbo Shipping, Feilida hit the daily limit. On that day, the Congyun Index (European Line) futures hit the daily limit, with an increase of 15.99%.

Some analysts pointed out that the Sino-US economic and trade talks have made substantial progress, alleviating global concerns about the escalation of trade frictions and enhancing confidence in the global economy. This is the main reason for the continued sharp rise in the European line and shipping sectors in the inventory transportation sector. In addition, the news that the Suez Canal has reduced costs is also beneficial to the shipping sector.

Suez Canal reduces transit fees

According to Xinhua News Agency, the Egyptian Suez Canal Authority issued a statement on the 13th saying that it will provide a 15% transit fee discount to large container ships from May 15. The move is intended to encourage shipping companies to return to the Suez Canal as the Red Sea security situation improves.

In a statement, Usama Rabiy, chairman of the Suez Canal Authority of Egypt, said the offer is applicable to container ships with net tonnage of 130,000 tons and above, and is valid for 90 days.

Rabie said the Canal Authority has been following up on the rapid changes in the maritime transportation industry and flexibly responding to the current challenges in the Red Sea region through communication with relevant parties in the international maritime community.

The Suez Canal connects the Red Sea and the Mediterranean. Since its completion and opening in 1869, it has become the most convenient "maritime bridge" between Europe and Asia, and has undertaken about 10% of the global maritime trade transportation before this round of regional turmoil.

The Suez Canal income is also one of the main sources of Egypt's national fiscal revenue and foreign exchange reserves. In the fiscal years 2022-2023, it will bring US$9.4 billion in revenue to Egypt. Before the security tensions in the region escalated, the canal navigation statistics set a new record in 2023, with the annual transit volume of ships reaching 26,434 ships, the highest in history, with an annual net tonnage of 1.56 billion tons, which is also the highest in history; the annual revenue reached US$10.3 billion, a record high.

After the new round of Pakistan-Israel conflict broke out in October 2023, Yemen's Houthi attacked ships that were "related to Israeli interests" sailing in the Red Sea to pressure Israel to stop military operations in the Palestinian Gaza Strip. The U.S. and British troops then took revenge. International shipping companies regard the Red Sea waters as high-risk routes and detours one after another, and the traffic volume and toll revenue of the Suez Canal have dropped significantly.

Data from the Suez Canal Authority shows that only about 13,213 ships passed through the Suez Canal in 2024, a decrease of about half from 2023. Suez Canal's revenue in 2024 was approximately US$3.99 billion, down more than 60% from 2023.

On May 6 this year, with the mediation of Oman, the United States and the Houthi armed forces in Yemen announced a ceasefire agreement, and the two sides promised to stop attacking each other, including not attacking US ships in the Red Sea and the Mande Strait, to ensure freedom of shipping and smooth international trade channels. According to US officials, the US did not inform Israel that it had reached a ceasefire agreement with the Houthi armed forces, and according to Israeli media reports, Israel was caught off guard, and the agreement obviously did not involve the conflict between Israel and the Houthi armed forces.

On May 9, Usama Rabiy, Chairman of the Suez Canal Authority, met with representatives from 25 major shipping companies and agencies, who called on the Egyptian government to provide temporary incentives to help offset the cost of increased costs of ships operating in and around the Red Sea due to regional tensions.

Trump once called for free

Recently, US President Trump has "requested" the right to navigation on the two major maritime transportation routes belonging to Panama and Egypt.

Trump said on his personal social media platform "Real Social" on April 26 local time: "American ships, including warships and merchant ships, should be allowed to pass the Panama Canal and the Suez Canal for free!" He said: "Without the United States, these two canals would not exist." He said he had asked the US Secretary of State to deal with the matter immediately.

In response to this, Panamanian President Jose Raul Mullino suspected of responding to Trump’s above remarks on social media platforms, saying that the Panama Canal toll is controlled by the Panama Canal Authority and there is no agreement that goes against it.

According to Xinhua News Agency, Trump did not explain how the "existence" of the Suez Canal has something to do with the United States. The modern Suez Canal was designed by French engineers in the 1850s and was built and opened for navigation in 1869. It was controlled by the colonial forces of France and Britain. By 1956, it was nationalized by the Egyptian government, and there was no participation of the United States from beginning to end.

Trump's latest remarks have been condemned by all walks of life in Egypt. Sam Suleiman, vice chairman of the Egyptian Senate's Committee on Foreign Affairs, Arab and African Affairs, said on April 28 that "Only Egypt has the responsibility to protect the Suez Canal". The income from the canal transit fee is a legitimate sovereign resource to support Egypt's national economy and serve Egyptian citizens and cannot be damaged for any excuse or reason.

Said Abdul Aller, chairman of the Egyptian National Progressive Unification Group Party, said on April 27 that Trump's remarks demonstrated the "colonialist mentality." Canal transit fees are formulated according to international standards and are not discriminatory and the United States cannot impose special conditions. “Trump’s call can only be seen as economic colonialism in new clothes.”

According to the Global Times, if American ships pass through the Panama Canal and Suez Canal for free, it can save American companies hundreds of millions of dollars in costs each year. However, the Wall Street Journal quoted analysts as saying that the economic value brought by American ships through the Suez Canal is limited. The Suez Canal Authority said that ships flying the U.S. flag account for only a small part of the ships traveling to the waterway.

"The United States has not played any role in digging the Suez Canal." Rabbia, deputy director of the Egyptian Pyramids Political and Strategic Research Center and member of the Egyptian National Dialogue Board of Directors, posted online that the idea of ​​connecting the Red Sea and the Mediterranean can be traced back to the ancient Egyptian era, and the modern Suez Canal, whose engineering was launched under the command of French engineer Resaib during the reign of Egyptian Governor Sayed Pasha in the mid-19th century. The United States had worked with other countries to provide concession financing for the Canal Company, but later exited the project, which resulted in Egypt having to borrow money to complete the excavation.

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