Suez Canal price increases to affect trade in Sub-Saharan and East Africa

Last week, Egypt announced that it would increase the transit fee for all vessels passing through the Suez Canal. The Suez Canal Authority released a statement noting that transit fees for tankers passing through the canal will rise by 15%. A 10% increase would be implemented for dry bulk carriers and tourist ships. This hike will take effect from the 1st of January 2023.

The chief executive officer of the Shippers Council of Eastern Africa (SCEA), Gilbert Lagat, noted that East Africa is dependent on the port for its exports bound to Europe, and its imports from Asia. In effect, the hike in transit fee is due to affect East African traders.

“East Africa depends on most of its imports from Asia, which uses an alternative channel, whereas goods being exported from the region have to pass through the Suez Canal. This will complicate export, and some ships might opt to change their destinations considering the economies of scale.” Lagat said.

East African exports to Europe majorly include agricultural produce. Crops like coffee, tea, tobacco, cut flowers, fruits, vegetables and fish.

In contrast however, some experts claim that the hike in fees won’t have a massive effect. Tim Huxley, chairman of Mandarin Shipping: “Oil prices are currently dropping and so if the canal prices itself out against the competition [which is going round Africa] then the Canal Authority would lose out.” A few other analysts seem to share his sentiments.

Source: africa.businessinsider.com


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