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The Suez Canal: the invaluable shipping shortcut

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Author(s): Ashraf Ghazy, Damietta Port Authority, Damietta, Egypt

The Suez Canal was first built by pharaohs, more than three millennia ago. In 1859, Francis Delicips had the idea of re-dredging it. It took the purely Egyptian labor almost ten years to dredge the canal. It was opened for navigation during the ruling of El Khedive Ismael (17 November, 1869), in a massive celebration attended by most of Europe’s kings and princes. Its depth was about 8m, water area 304 m² and the largest shipload that can pass through was 5000 tons – a standard type of the time.

The geographical position of the Suez Canal (SC) affords it the advantage of being the shortest route between East and West, as compared to the Cape of Good Hope. Table 1 shows how much time ships navigating through the SC can save. The quicker the journey time, of course, the less fuel used and the less expensive operating costs become.

Suez Canal pricing policy

Services are priced by specialized committees of highly qualified and experienced staff. The price of transit service is based on a package of variables such as lost opportunity cost, inclusive of currency basket; energy prices, piracy risk and costs of transiting via other routes. Vessel capacity, specifications, type of consignment, dispatch time attained and non-differentiation are all relevant to pricing. In 2007, the Suez Canal Authority (SCA) increased transit fees in the range of 1.41 per cent to 3.73 per cent, at an average of 2.84 per cent for all types of vessels, for the third year in a row. A 6 per cent increase for all vessels was enforced in 2005, followed by a further three per cent increase in 2006 after an eight-year price fix. The authority decided to keep prices unchanged in 2008, considering the global financial situation. Early in 2008, fluctuating oil prices, together with development downturn in several countr ies and globally slower trade movement, all impacted volumes of cargo transiting the Canal.


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