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Changing perceptions: The Suez Canal at 150

The Suez Canal celebrates its 150th year in 2019. Earlier this summer the Suez Canal Authority (SCA) joined expert Suez Canal Transit & Husbandry Agent, Consult Navigation, in London to update invited representatives from the shipping industry on the developments of one of the world’s most important waterways. Baltic Briefing was there, and while the key focusses of the morning’s presentation centred on tolls and pricing, as well as the measures in place to ensure safe passage through the Canal, this meeting was ultimately about changing perceptions.

A new image

Four years have passed since the new, expanded, Suez Canal was opened. The US$8.6 billion project, funded entirely by public subscription, widened and deepened the existing waterway and created a parallel 34-kilometre channel to allow two-way transit along part of the route from kilometre 51 to 122 of the 161-kilometre waterway. The Canal Authority says the expansion has reduced navigation times from 18 to 11 hours and aimed to increase the number of ships transiting the Canal by the year 2023 to 97 per day.

Historically, some of the realities of moving through the Canal have been questioned. Providing ‘gifts’ to local Pilots to ensure safe passage being one such example that splits the opinion of operators, with reports of those Masters unwilling to do so subsequently facing challenges in persuading Pilots to navigate them through the Canal. However, the Port Authority makes clear that it is working hard to ensure such instances are not a part of its future, assuring those in attendance that should there be misunderstandings moving forward that the Master of any ship transiting the Canal should feel comfortable contacting the Authority directly to ensure this, or any other type of situation, is swiftly resolved.

Tolls and pricing advantages

The Canal Authority makes clear that the expansion in 2015 has not impacted the calculating of its tolls. Fees for transiting the Canal are based on Suez Canal Net Tonnage (SCNT), which take into account vessel particulars, trade route, economies of scale, market conditions and the cost of moving cargo via Suez compared to alternative routes.

The SCA has adopted what it calls flexible marketing policies to encourage vessels to use the Suez Canal route. These policies include rebate systems including the longstanding policy in place for long haul vessels, which looks to ensure tolls don’t exceed the value of using the Canal. Another rebate structure is in place for LNG vessels with 5%, 7% and 10% rebates offered on vessels carrying 1-3, 3-10, and 10+ million tonnes of cargo respectively.

In addition to these, permanent toll reductions of 25% for LNG carriers and 50% for cruise vessels calling at ports in Egypt, the Red Sea or the Mediterranean are in place, with a full exemption for ships transiting the Suez Canal for repair or maintenance in SCA shipyards or its affiliated companies. Temporary toll reductions are also in place for dry bulk, tanker, container and LNG vessels through a system of circulars, more details of which can be found on the SCA website.

In terms of tolls for passing through the Canal, officials were keen to make clear that technically vessels of all sizes can pass through Suez, albeit with the very largest carriers needing to be partially laden. The SCA at this stage highlighted the Sumed pipeline, stating that supertankers can pass through the Canal should they choose to lighter part of their cargo through this pipeline. Tolls of US$0.63 are levied on each metric tonne of crude oil cargo via this option, with the toll for the remaining crude oil cargo carried by the tanker calculated by deducting the volume discharged at Sumed from the total cargo indicated in the cargo manifest and the bill of lading.

Focus on safety

Throughout the presentation, the importance placed on safe passage was a consistent theme. Officials from the Port Authority were keen to present the range of measures they have in place to ensure this.

The Suez Canal Maritime Training and Simulator Centre aims to educate Suez Canal Pilots on the safe handling of vessels during different navigational scenarios. Ships are further monitored during their passage through the Canal via an advanced radar network, with 16 pilotage stations (approximately one every 10 kilometres) along the waterway. The traffic system has two convoys, one from the North and one from the South. While navigational aids such as tugs, pilotage stations and buoys, for which there are 650 along the waterway of the Canal, help further support the passage of ships during transit.

According to the Suez Canal Authority, it is the implementation of these measures that ensures accidents in the Canal are uncommon and if they do occur, the interruption to navigation is now minimal.

Last word

Baltic Exchange Chairman, Denis Petropoulos, joined those in attendance. Catching up with him after the presentation his final assessment was simple, “Suez represents an essential seaway for the global movement of trade, where time is money and safety is paramount.” Through the developments at the Canal, the SCA is aiming to ensure these essential aspects of the movement of trade continue to be achieved with the highest levels of efficiency and safety, while ensuring that those passing through Suez know that should either of these aspects not be satisfactorily achieved, the communications channels are open and available to ensure this is corrected.
Source: Baltic Briefing

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