Recently, the Suez Canal Administration of Egypt issued an important statement announcing a decision to increase transit costs for some ships starting in mid-January next year, which is likely to have some impact on global trade and inflation.

New adjustment of transit fees

As of January 15, 2024, most ships, including crude oil carriers, finished oil carriers, LNG carriers, LNG carriers, chemicals carriers, etc., will be charged a 15% increase, while other ships such as dry cargo ships, general cargo ships, rolling boats, etc. will be charged a 5% increase.

The Importance of the Suez Canal

The Suez Canal is not only one of the busiest waterways in the world, but also the shortest waterway between the Eurasian continents. It carries about 12% of global trade flows, especially for oil transportation from the Middle East to Western Europe, 70% of which need to pass through the Suez Canal. In addition, revenue from the canal has become Egypt’s main financial and foreign exchange source.

According to statistics, 180,000 ships pass through the canal every year from more than 100 countries and territories. Of all the artificial canals, the number of countries using the Suez Canal, the number of ships passing through and the volume of cargo are two in number.

c) Economic impacts

Recently released data from the Suez Canal Administration show that revenue for the 2022 fiscal year reached $9.4 billion, up 34.7 percent from the previous fiscal year. It is expected that revenue will continue to grow to $10.3 billion by the end of 2023.

However, this adjustment of transit fees could have an impact on global trade and inflation.The well-known financial blog Zerohedge’s analysis pointed out that while the adjustment of fees will not have much impact on the overall flow of global trade, it is likely that this part of the cost will eventually be transferred to consumers due to the rising transit fees of ships, thereby increasing global inflation.