Egypt Unrest and Growth in Piracy ‘Make Ship owners more Nervous than Toll Hike’
Egypt’s plans to raise Suez Canal tolls in May appears to be less of an issue for ship owners than current unrest in the country and escalating violence along the canal according to Typhon, a group set up to protect private ship owners’ assets at sea.
The 120-mile long canal, which for decades has been an important shortcut connecting the US and Europe with the Indian Ocean and its Asian ports, faces the threat of closure. Today, many ship owners, concerned that there will be delays in cargo reaching their destination due to on-going unrest in Egypt, are looking at alternative routes to avoid the canal. However, high fuel costs are deterring some ship owners from re-routing according to the group, which has developed an anti-piracy deterrent protection model and also provides port security services.
“Shipping companies are concerned that escalating tensions in Egypt are affecting wider trade with the country,” said Ant Sharp, chief executive officer (CEO) of Typhon. “The unrest which includes some disruptions along the Suez Canal is a major cause for concern for ship owners, charterers and the government. Re-routing will be a big issue for Egypt which heavily depends on the fees it charges ships for permission to transit the canal. In short, one of Egypt’s major sources of foreign revenue is the canal. Revenue has been in decline for several years due to a decrease in transits and the rise of piracy off the coast of Somalia.
“Should Egypt continue to increase transit toll fees to boost revenues and should there be a rise in ship owners re-routing and an increase in piracy due to incessant unrest, the steady decline of the country will only continue and countries will cease to trade with Egypt,” he adds
“But if ship owners really weigh up the pros and cons, in terms of cost savings, they will see that the massively high fuel prices involved in re-routing around say the Cape of Good Hope, would be more expensive than incorporating a bespoke private protection model into their business and transiting the canal.”