Suez Canal sweetens discounts to compete with Panama Canal

The Suez Canal Authority (SCA) has announced new discounts for long-distance trades on certain types of container ships and tankers.

PHOTO: The Port of Balboa at Panama's Pacific Ocean side. Getty Images

The new measures include a discount of 75% for product tanker voyages between the Americas and Asia.

A discount was already available for crude carriers, but until now, product tankers did not benefit from it. The SCA has released circulars indicating that product tankers sailing between the US Gulf, the Caribbean and Asia will now receive increased rebates of up to 75%, depending on the Asian port of call.

The toll discount for product tanker voyages to or from ports between Karachi in Pakistan and Cochin in south-west India increases from 20% to 30%. Voyages further east will enjoy higher rebates of 65%, up from 60%. Even further east, they remain flat at 75%.

This comes after a 15% toll increase set to take effect from next month. SCA has raised toll fees several times over the past two years, amid an increase in oil trade after Russia attacked Ukraine and was hit by European sanctions.

The Panama Canal is the shortest trading route between major US ports on the Atlantic side to Asia. However, because of low water levels in the canal and prolonged waiting times to transit it, some ships are being diverted to longer routes through the Suez Canal or elsewhere.

Lower toll fees in the Suez Canal could be an opportunity to attract vessels that would otherwise not have been customers.

By Debarati Bhattacharjee

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