Shipping doldrums: Raising the competitiveness of Egypt’s ports
Egypt needs to raise the competitiveness of its ports if it wants to attract greater volumes of transit trade, Suez Canal Container Terminals (SCCT) management told journalists this week.
What costs around $70,000 at the East Port Said Port costs 60 per cent less, or around $30,000, at the Greek port of Piraeus, Hany Al-Nady, public and government relations and security director of the SCCT told journalists at a roundtable in Cairo on Sunday.
However, these figures are still an improvement on fees that had risen to unprecedented heights in 2015 on the back of Decree 488 hiking Egyptian port fees.
The SCCT is an Egyptian company that operates the East Port Said Port, formerly known as Shark Al-Tafriaa. It is 55 per cent owned by a Dutch company, APM Terminals, and 20 per cent owned by the Chinese company Cosco.
Some 5.3 per cent of its shares are owned by the Suez Canal Authority (SCA), five per cent by the National Bank of Egypt, and the remaining 9.7 per cent by private investors.
The hikes in 2015 had chased away some 16 shipping lines from the port by 2017, Al-Nady said.
The terminal is still receiving fewer vessels than in 2013 when around 2,300 vessels used the port. That figure had dropped by over 40 per cent by 2018.
While the drop was partly on the back of slowing global trade and lower oil prices, the slump in numbers was propelled largely by the higher fees.
Since the flight of the shipping lines, the SCA has offered various discounts in an attempt to attract them back. It has given discounts to crude oil carriers and shipping lines travelling between the east coast of the United States and ports in South and Southeast Asia via the Suez Canal.
Ninety-five per cent of East Port Said Port’s businesses is in transit trade, Al-Nady said, adding that it was currently operating at 50 per cent of capacity. The transit trade represented a main source of value added, he said.
Business was suffering in Egypt, Lars Christensen, CEO of the SCCT, said. In 2018, profits had been $5 million, a 50 per cent drop on the year before, he said, adding that in 2019 the company could be losing an average of $1 million a month.
Despite some improvements, the fees still need revisiting because the competition remained cheaper, Al-Nady said. Egypt’s fees were still 15 to 20 per cent higher than the competition, he added, saying that they needed to be cut in order to attract larger volumes of transit trade.
The aim should be that ships do not just pass through the Suez Canal but also dock in its ports and engage in transit trade, Al-Nady said, explaining that this consisted of large ships offloading their cargo and this then being picked up by smaller ones and distributed to ports in the south and east of the Mediterranean.
Each step of this process was a source of revenue, he said, adding that it would be more costly if each large vessel had to stop at every port, sometimes impossible in any case because of a lack of infrastructure.
Christensen said the SCCT was in discussion with the government about the situation. Egypt’s fantastic location, workforce and infrastructure needed to be put to more efficient use, he added.
Three decrees on transit trade had been issued since 2015 and yet Egypt remained uncompetitive, Christensen said. It now had the chance to come up with a new framework as it prepares to inaugurate new tunnels connecting the Sinai Peninsula with the rest of Egypt.
This framework should be sustainable for at least five years in order to encourage the shipping lines to come back to Egypt, he concluded.
Source: Ahram Online