The Suez Canal is one of the world’s largest artificial sea-level waterways located in Egypt. It was constructed by Ferdinand de Lesseps, a French diplomat, in 1869 to connect the Arabian Sea to the Isthmus of Suez in the Mediterranean Sea.
The canal is owned and managed by Suez Canal Authority, an Egyptian state-owned agency, and is one of the most significant shipping routes in the world for oil, consumer goods, and other essential commodities.
The Suez Canal Surcharge is an accessorial fee levied by carriers to shippers or consignees for cargo that is moved through the Suez Canal. The main purpose of this surcharge is to offset operational costs incurred (most of which are charges by the Suez Canal Authority) while using this shipping route.
The Suez Canal connects three continents – Asia, Africa, and Europe – and enables billions of dollars of freight transport operations daily. Besides commercial activities, the waterway also serves as a route for military ships, including the US Navy.
However, the Suez Canal has garnered a bad reputation for having a less-than-par safety record, with an average of eight piracy incidents yearly. Most marine piracy incidents in the region occur near Somalian coasts. Moreover, the Suez Canal was blocked for six days in 2021 after a ship carrying 20,000 TEUs ran aground.
In the next few sections, we will be discussing the typical range of the Suez Canal Surcharge, who levied these additional fees, and who pays for it.
How Much Is the Suez Canal Surcharge?
As with the Gulf of Aden Surcharges and Panama Canal Surcharges, the Suez Canal Surcharges are not standardized among carriers. This means that there can be significant price differences, depending on the respective shipping line.
While carriers generally consider a variety of factors such as cargo type, container type, number of TEUs, security costs, and more, the Suez Canal Surcharge usually falls between $85 and $100 per TEU (twenty-foot equivalent unit).
One reason the charge is higher compared to the surcharges of some other routes is the transit fee charged by the Suez Canal Authority. A publication by CNBC noted that the fees are set to rise by 15% in 2023.
However, due to challenges with carrier reliability, faster transit times are still preferred and shipping routes through the Suez Canal are projected to still be cost-effective enough for shippers.
Who Charges It?
When transitioning through the canal, the Suez Canal Authority levies usage fees based on the type and size of the vessel. As these costs are imposed by the authority on shipping lines and vessel operators, they are subsequently passed onto shippers and consignees.
Who Pays for It?
Most carriers pass these costs on to shippers or consignees to pay the surcharge to offset some or all of the costs incurred by them when moving cargo across the Suez Canal. The charge is levied to reduce some financial costs of dealing with potential piracy incidents or other costs while operating on this route.