Egypt Cashing in on Suez Canal

[hkskyline]

50 years on, Egypt cashing in on Suez nationalisation

CAIRO, July 23, 2006 (AFP) - Fifty years after its nationalisation, the Suez Canal is more vital than ever to Egypt's economy and revenues from transit fees look set to continue a spectacular rise.

"Since the first oil crisis in 1973 and the soaring prices, the economic importance of the canal for Egypt never ceased to grow and it has become an irreplaceable source of income," economist Samir Radwan told AFP.

Radwan, who heads the Economic Research Forum, stressed that the success of the strategic waterway parting the desert and linking the Mediterranean to the Red Sea had also triggered a boom in surrounding areas.

The canal, the 50th anniversary of whose nationalisation by former Egyptian president Gamal Abdel Nasser will be marked on July 26, bolstered a rapid development of the Sinai, "especially in the south of the peninsula which accounts for 60 to 70 percent of the country's tourism industry", he said.

Transit fees alone are the third largest source of revenue for Egypt -- the most populous country in the Arab world -- after tourism and the remittances of expatriate workers.

The volume of traffic going through the canal, a hub for trade between Europe and Asia, has always been considered a barometer of the country's economic health.

According to the canal authority, the waterway injects 5.3 million dollars of net profit into the state's coffers every day. Receipts have doubled in four years and are still rising steadily.

In May 2006, receipts edged to a new monthly record of 324.6 million dollars, up 42 percent from the same month the previous year.

Annual receipts reached 3.4 billion dollars in 2005 and a new record is expected to be set in 2006 on the back of hiked transit fees and growing traffic.

"If the canal was important when it was first opened, it is much more important now, especially because of the growing dependence of the West on Middle Eastern oil," said Lewis Fischer, a leading maritime expert based in Canada.

Radwan said soaring oil prices have boosted Suez canal receipts but stressed that the adverse effects of a downturn in the oil market would be limited as the waterway would remain a prime conduit for China's expanding trade.

"The canal is a crucial route for Chinese goods and it will be the same for Indian goods when India experiences its expected economic boom," he said.

Experts have also said that increased transit fees on the Panama canal could also divert more traffic to Suez.

"But the canal also plays a vital strategic role," Radwan added, citing the countless conflicts that have broken out and are still raging in the Middle East.

Scores of military ships, including the US fleet supporting the troops in Iraq, transit through Suez regularly as part of high-security convoys.

Egypt's security set-up to protect the jewel of the nation is huge, with thousands of forces deployed all along the canal's 118 miles (190 kilometres).

The strategic value of the canal, whose closure could instantly send world markets crashing, is the main reason why Egypt is not expected to privatise it any time soon.

"Whether an infrastructure like the canal is operated by a private or public body makes little difference except to ideological zealots," Lewis argued.

Jurist Abdel Moneim al-Sharqawi had been the first in 1987 to put forward a proposal whereby the canal authority was converted into a company, split equally between the state and private shareholders.

The sale was to be used to pay off the country's debt.

But his idea triggered fierce hostility from leftist and nationalist leaders, intellectuals and the general population, who vowed in unison that Abdel Nasser's feat was not to be undone.

[hkskyline]

Facts and figures on Egypt's Suez Canal

CAIRO, July 23, 2006 (AFP) - Egypt will mark Wednesday the 50th anniversary of the nationalisation of the Suez Canal, an economically and strategically crucial waterway linking the Mediterranean to the Red Sea.

Here are the essential facts and figures on the canal:

- Built under the supervision of French diplomat Ferdinand de Lesseps and inaugurated in 1869

- Overall length: 190.25 kilometres (118.2 miles) Suez is the longest lockless canal in the world

- Width at water level: 280-345 metres (306-377 yards)

- Depth: 22.5 metres (73.8 feet)

- Maximum deadweight tonnage: around 210,000 tons

- 18,700 ships transited through the canal in 2005

- Ships travel through the canal in thrice daily convoys in both directions. The permissible speed ranges from 11 to 14 kilometres/hour (7-8.5 miles/hour)

- Seven percent of global maritime transport transits through the Suez canal

- Canal reduces by a quarter the distance between Rotterdam and Tokyo, two of the world's largest harbours -- compared to the route around Africa

- Suez Canal transit fees are the third largest source of revenue for Egypt's economy after tourism and remittances from expatriate workers

- Canal receipts reached a record 3.4 billion dollars in 2005, up more than 12 percent from the previous year

- Receipts are expected to further rise in 2006 on the back of a transit fees hike of three percent since March and growing trade between China and Europe

[hkskyline]

Suez Canal expansion running behind schedule

ISMAILIA, Egypt, July 28 (Reuters) - A project to deepen the Suez Canal is running behind schedule because an unexpected increase in traffic has hampered dredging work, the chairman of the Suez Canal Authority said on Saturday.

The authority had hoped to complete the work by the end of 2006, making the canal 66 feet (20.1 metres) deep instead of 62 feet and opening the waterway to more giant vessels.

But authority chairman Ahmed Ali Fadel told Reuters: "I doubt we will be able to complete this phase by the end of the year because of the high number of ships passing through. The dredgers work only when the convoys stop.

"This does not worry us because there is a guaranteed revenue from the current increase in the number of ships. There is no need for us to hurry," he added.

The Suez Canal has repeatedly broken records this year for revenue and traffic. In the 2006/7 year, which ended on June 30, it earned $4.17 billion, up from $3.56 billion the year before.

At the end of the current project, which is costing 1.2 billion Egyptian pounds ($210 million), the canal will be able to take vessels larger than 220,000 tonnes. ($1 = 5.66 Egyptian pounds)

[hkskyline]

Egypt Suez Canal income hits record $426.3 mln Dec

ISMAILIA, Egypt, Jan 14 (Reuters) - Egypt's revenues from the Suez Canal climbed to a record $426.3 million in December from $350.2 million in the same month of 2006, a Suez Canal Authority official said Monday.

Canal revenues totalled $412.8 million in November.

The number of vessels passing through the waterway rose to 1,815 from 1,765 in November and from 1,632 in December 2006, the official added.

The Suez Canal is an important source of foreign currency for Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.

The Suez Canal Authority said in December it would raise its transit fees in 2008 by between 4.2 percent and 14.7 percent, with an average of 7.1 percent, taking effect in April.

[TOCC]

what are those figures in $US

[hkskyline]

Originally Posted by TOCC

what are those figures in $US

I believe so. They're not in pounds / local currency.

[hkskyline]

Suez canal earns record 487 million dollars in May
4 June 2008
Agence France Presse

Egypt's Suez Canal Authority posted a record monthly income of 487 million dollars in May, a 27 percent surge on the previous year, authority chairman Ahmed Fadel said on Wednesday.

The income was also an eight percent increase over April, which had itself brought in a record income of 449 million dollars.

The earnings followed the authority's 7.1 percent average increase in fees for different classes of ship imposed in March.

With some 7.5 percent of world trade transiting the canal, which links the Mediterranean and the Red Sea, income from the waterway provides Egypt with its third highest source of foreign currency after tourism and remittances from Egyptians working abroad.

For the fiscal year June 2006-June 2007, Cairo benefitted from record receipts from the canal totalling some 4.16 billion dollars.

[hkskyline]

FEATURE-Financial crisis may end boom for Suez Canal

ISMAILIA, Egypt, Oct 20 (Reuters) - Winding through this small Egyptian town like an artery, pumping cash into its hospitals and schools and beyond into the wider economy, the Suez Canal has flourished as a shipping shortcut.

Now the faltering global economy, coupled with a rise in piracy to the canal's south, looks set to end the high times for the waterway and the town Egyptians call its bride.

The canal, versions of which were first built by pharaohs more than three millennia ago, has helped the world's most populous Arab country to its fastest growth in decades, contributing 3.3 percent of gross domestic product in the 2007/2008 fiscal year.

A near "perfect storm" of world trends has lifted revenue from the 190-km (110-mile) waterway to record levels: a surge in global trade powered by China and India, higher global shipping costs, capacity problems with the Panama Canal and higher oil prices forcing shippers to take shorter routes.

Those factors made it possible to hike canal transit fees from April by an average 7.1 percent while August revenues hit another monthly record of $504.5 million.

Samah Afafa Yousof, a lawyer at one of the canal's subsidiaries and a member of Ismailia's council, said her annual salary had tripled to about 1,500 Egyptian pounds ($270) as the fortunes of the canal have risen.

"This is the best age for the canal, in all its history," said Yousof, 28, whose father recently won an award for 25 years of service to the canal.

But some are predicting tougher times ahead.

Cairo-based investment bank EFG-Hermes says the canal may earn a record $6.1 billion this fiscal year, up about 18 percent from the fiscal year that ended in June.

But it sees revenue growth slowing to 10 percent in the 2009/2010 fiscal year, with declining European demand presenting a significant downside risk.

"The big boom in world trade and the rise in oil led to a big rise in our daily operations," Suez Canal Authority Chairman Ahmed Fadel said in July. "(But) we are a part of the global economic situation, and we expect any decline in growth to have an effect on sea trade."

BOOSTING GROWTH

Egypt's government said this month it was maintaining its growth target at 6-7 percent for the current fiscal year, after growth of 7.2 percent in 2007/08.

However, as well as contagion from the global financial crisis, the country is struggling with a fiscal deficit and popular discontent over inflation, which was running at 21.5 percent in urban areas in the year to September.

Prime Minister Ahmed Nazif said this month that the global downturn could impact the canal, as well as tourism and exports -- all important sources of foreign currency.

Demand for Chinese consumer goods from Black Sea countries such as Russia and Turkey and from Europe for Asian cars were main drivers of canal use, said Mark Page, director of liner shipping at Drewry Shipping Consultants in London.

The United States, the world's largest energy consumer, imported a record 738 billion cubic feet of liquefied natural gas (LNG) in 2007, much of it through the canal from Qatar, the world's largest LNG exporter.

Surging global shipping costs have also been a boon for the waterway, discouraging shippers from taking longer routes.

But the Baltic sea freight index, which tracks sea freight prices to haul commodities like coal, iron ore, cement and grains on some key routes, fell to its lowest level in more than five years this month on fears a recession would slow trade. The index had hit record highs in June.

"The shipping industry has already started to see a slowdown and a fairly dramatic fall in freight rates," said Emily Comyn, spokeswoman at the International Chamber of Shipping in London.

"Coupled with falling steel prices and the seeming reduction in Chinese demand for iron ore and coal, the industry in general can probably expect a significant slowdown in the coming months, and this will of course be reflected in Suez Canal transits."

STORMY WATERS

The canal is a source of Egyptian pride: the government nationalised it in 1956 and then defended it against coordinated attacks by Britain, France and Israel.

Egyptian families love to visit Ismailia, which houses canal headquarters, to sit on shaded benches in parks lined with date palms and watch giant tankers pass by.

The town's best hospitals and schools, as well as much of its land, is owned by the authority which manages the canal. Residents call it a state within a state.

But the canal is also a source of controversy for a government that is friendly with the United States.

The political opposition has demanded President Hosni Mubarak's government close it to U.S. warships, especially during the Iraq war, and has tried to use that issue to rally public discontent with Egyptian foreign policy.

In March, a cargo ship on contract with the U.S. Navy shot at Egyptian merchants after they approached the ship, killing one and reopening the controversy.

The threat of piracy also hangs over future growth.

Just south of the canal, heavily armed Somali pirates have stepped up attacks, with one almost every day. Chatham House, the international affairs group, says piracy could drive some ships out of the Gulf of Aden, cutting canal traffic.

Other factors will help offset slower trade. The canal has benefited from capacity problems at the Panama Canal, an alternative transit route between the United States and China.

Waiting times at the Panama Canal, which is operating at near full capacity, jumped 56 percent in the second quarter of 2008 from the previous year, with ships averaging about 38 hours in the 50-mile (80-km) waterway.

"Capacity problems have meant that some cargoes for the eastern United States have come around through the (Suez) canal and the Mediterranean," said Simon Kitchen, senior economist at EFG-Hermes.

($1 = 5.5364 Egyptian pounds)

[hkskyline]

Suez Canal might adjust transit tolls - chairman

CAIRO, Nov 28 (Reuters) - The Suez Canal might adjust its tolls for ships for 2009 in light of slower world economic growth and the international financial crisis, the chairman of the Suez Canal Authority said in remarks published on Friday.

Revenue from canal tolls could fall slightly this year, after the authority initially expected a 10 to 20 percent increase, Chairman Ahmed Ali Fadel added. He was quoted by the Egyptian state news agency MENA.

The canal faces the prospect of declining traffic because of a drop in trade between Asia and Europe and because pirates based in Somalia have driven some shippers to reroute their vessels around the Cape of Good Hope.

"Fadel ... did not rule out reductions in the transit tolls for some types of ships, and he also did not rule out an increase by a reasonable amount in these tolls," it added.

"If circumstances require a cut in tolls for certain routes, in the interests of the world economy, then that will be taken care of," the chairman added.

"If things go as desired there will be a slight fall (in tolls this year), while the revenue increase we were expecting was about 10 to 20 percent," he said.

It was not clear if he was talking about calendar 2008 or the current financial year, which began on July 1.

Statistics from the Suez Canal Authority show that in the first 10 months of 2008, the canal brought in $4.57 billion, almost as much as in all of 2007. The canal raised tolls by an average of 7.1 percent starting April.

On Tuesday canal officials said they were still expecting an increase of about 17 percent in tolls in calendar 2008.

Fadel said: "The canal can deal with a slowdown in international growth rates, but if there is a recession, then that is another matter."

He said both piracy and the international financial crisis were problems for the canal, but the crisis was more serious.

[hkskyline]

Suez Canal to announce toll changes next week

ISMAILIA, Egypt, Jan 1 (Reuters) - The Suez Canal will announce new tolls for 2009 on Monday, Egypt's state-run Middle East News Agency (MENA) reported on Thursday, quoting a canal authority spokesman.

The authority will also answer questions about the impact of the financial crisis on the canal during a news conference.

Earlier in the day, an official with the Suez Canal Authority told Reuters the announcement of the new tolls was postponed for the first time in history because of uncertainties about the global economy.

The authority usually makes the announcement by the end of the year, setting tolls for the coming 12 months.

Daily fluctuations in traffic and revenue in December made it difficult to decide what the tolls should be, he said.

"All the current indicators, including lower shipping rates, slower world economic growth, the decision of some lines to avoid the canal because of piracy, and the freeze on work in some shipyards for lack of liquidity, make it more likely that the management will go for a toll cut this year, or at least leave rates unchanged," he added.

The effects of recession in developed economies did not show up in the figures for November, the last complete month available. The canal earned $419.8 million in the month, 1.7 percent more than in the same month of 2007.

[davsot]

The Suez Canal is definitely one of the greatest accomplishments in logistics.

[hkskyline]

Suez Canal tolls unchanged in 2009 as world crisis bites
5 January 2009
Agence France Presse

The Suez Canal has opted against increasing tolls in 2009 because of uncertainty in the shipping industry caused by piracy and the global credit crunch, a canal authority official said on Monday.

"Tolls for crossing the canal remain unchanged," Canal Authority President Ahmed Ali Fadel told journalists, admitting that the canal is in "a crisis" because fewer boats are passing through.

The Canal Authority will "continue to follow the consequences of the world financial crisis, he said, suggesting tariffs could be raised in future, depending on the situation.

He predicted that the number of boats using the canal will sink by seven percent this year if the global slowdown continues.

The authority increased fees by an average 7.1 percent in March 2008 for different classes of ship.

The announcement of 2009 tolls was delayed from January 1, because of "big fluctuations in the shipping market and world commerce," a canal official said at the time.

Fadel predicted then that they would be kept the same or even cut because of the impact on traffic of the economic slowdown and the threat from piracy in the Gulf of Aden.

Arms manufacturers in particular have rerouted their shipping round the Cape of Good Hope in recent months to avoid pirates preying on vessels en route between the Suez Canal and the Indian Ocean.

The canal is Egypt's third-largest source of revenue after tourism and remittances from expatriate workers.

The government last year raised more than 5 billion dollars in tolls from ships passing through the canal.

[hkskyline]

Suez Canal revenues fall to $391.8 mln in Dec

CAIRO, Jan 18 (Reuters) - Egypt earned $391.8 million in revenue from the Suez Canal in December, down from $426.3 million in December 2007 and from $419.8 million in November, the government said on Sunday.

Economists have been watching Suez Canal revenues closely to see any effects from piracy off the Somali coast and the recession in major economies, which is expected to reduce the volume of trade between Asia and Europe.

Traffic and cargo fell in the last three months of 2008 as a result of the financial crisis, and shipping rates declined to around $18,000 a day from $163,000 before the crisis, according to the Suez Canal Authority.

The Canal authority said earlier in January that it would leave unchanged its transit tolls for 2009 despite its expectations that the global financial crisis will reduce traffic.

The canal is an important source of foreign currency for Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.

The number of vessels using the waterway was 1,560 in December, down from 1,815 in December 2007 and from 1,770 in November, the government said on its Information Portal website.

[hkskyline]

Suez Canal traffic at five-year low as crisis bites
15 February 2009
Agence France Presse

Suez Canal traffic in January hit its lowest level in five years because of the global financial crisis and boats taking other routes to avoid piracy, a Canal Authority official said on Sunday.

The number of boats passing through the narrow channel in January was 1,313 compared to 1,690 in January 2007, down 22 percent, the unnamed official said.

Revenues in the same month were down 19.5 percent from 414.2 million dollars in 2009 to 332.4 million in 2008.

The volume of trade passing through the canal also took a hit, dropping from 74 million tonnes in January 2008 to 57 million tonnes in January 2009, its lowest level in 30 months.

The Canal Authority opted at the start of the year against increasing its tolls in 2009 due to uncertainty in the shipping industry in the light of the piracy problem in the Gulf of Aden and the worldwide credit crunch.

Arms manufacturers in particular have rerouted their shipping round the Cape of Good Hope in recent months to avoid pirates preying on vessels en route between the Suez Canal and the Indian Ocean.

The canal is Egypt's third-largest source of revenue after tourism and remittances from expatriate workers.

The government last year raised more than 5 billion dollars in tolls from ships passing through the canal.

[gramercy]

its insane that the chinese / russians dont put together a railroad that would compete with shipping

up until last year, there was no freight train from europe/china and back
even with a very-very low average speed (20kph...) the train is faster

i think there's a great future for freight trains running from asia to europe and back, they should capture a huge %

[hkskyline]

Originally Posted by gramercy

its insane that the chinese / russians dont put together a railroad that would compete with shipping

up until last year, there was no freight train from europe/china and back
even with a very-very low average speed (20kph...) the train is faster

i think there's a great future for freight trains running from asia to europe and back, they should capture a huge %

I think one of the key problems is the large # of countries that line the rail route, meaning delays at border crossings repeated multiple times.

[gramercy]

Originally Posted by hkskyline

I think one of the key problems is the large # of countries that line the rail route, meaning delays at border crossings repeated multiple times.

well, its only china-mongolia-russia, and then depending on the direction belarus-poland or ukrain
inside europe, there's no need to stop anymore (well, if its schengen borders)

plus if the volume was lets say 30% of the volume of shipping, that would incentivise them to speed up the procdures


in the beginning, it should only be container trains, which could be fully automated, including loading from standard gauge to broad gauge

[hkskyline]

Originally Posted by gramercy

well, its only china-mongolia-russia, and then depending on the direction belarus-poland or ukrain
inside europe, there's no need to stop anymore (well, if its schengen borders)

plus if the volume was lets say 30% of the volume of shipping, that would incentivise them to speed up the procdures


in the beginning, it should only be container trains, which could be fully automated, including loading from standard gauge to broad gauge

How about cost though? How much cheaper would rail transport be?

[hkskyline]

Suez Canal revenues dip 21 pct to $327.9 mln in March

CAIRO, April 12 (Reuters) - Egypt's Suez Canal revenues dropped 21 percent to $327.9 million in March, compared to $416.9 million in the same month last year, but were up from $301.8 million in February, the government said on Sunday.

Economists have been watching Suez Canal revenues closely to see any effects from piracy off the Somali coast and the recession in major economies, which is expected to reduce the volume of trade between Asia and Europe.

The canal authority said earlier in January that it would leave unchanged its transit tolls for 2009 despite its expectations that the global financial crisis will reduce traffic.

The canal is an important source of foreign currency for Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.

The number of vessels using the waterway was 1,439 in March, down from 1,699 in March 2008 but up from 1,272 in February, the government said on its Information Portal website: (http://www.eip.gov.eg)

[hkskyline]

Suez Canal April revenues drop 22.7 pct yr-on-yr

CAIRO, May 7 (Reuters) - Egypt's Suez Canal revenues dropped 22.7 percent to $346.9 million in April, compared to $448.9 million in the same month last year, but were up from $327.9 million in March, a Suez Canal Authority official said on Thursday.

Economists have been watching Suez Canal revenues closely to see any effects from piracy off the Somali coast and the recession in major economies, which is expected to reduce the volume of trade between Asia and Europe.

The canal authority said earlier in January that it would leave unchanged its transit tolls for 2009 despite its expectations that the global financial crisis will reduce traffic.

The canal is an important source of foreign currency for Egypt, along with tourism, oil and gas exports and remittances from Egyptians living abroad.

The official said the number of vessels using the waterway was 1,482 in April, up from 1,439 in March.