The Mediterranean container trades could be upended once more after the Suez Canal Authority today announced it was offering a 15% discount on container ship transits from 15 May.
In a circular today, the SCA said the offer was in “response to requests from containership owners and operators, and in light of recent positive developments in the security situation in the Red Sea and Bab al-Mandab Strait”.
It added that it would apply to vessels of a Suez Canal Net Tonnage of 130,000 tons or above on both northbound and southbound transits and would come in the form of a 15% rebate on transit.
It is set to last for 90 days.
Since the Houthis began attacking commercial shipping in the Red Sea, it is estimated that the canal has lost around two-thirds of its traffic as carriers re-route vessels around the Cape of Good Hope – financially the reductions are said to have amounted to $6bn per year.
It also had a dramatic effect on container ship deployment and ability of carriers to serve Mediterranean ports, as evidenced by the wave of congestion that hit the region last year as carriers tried to develop alternative transhipment options.
French carrier CMA CGM has widely been tipped as the most likely carrier to resume full transits of the canal, and last week SCA chairman Ossama Rabiee met with CMA CGM executive VP of assets and operations, Christine Cabau, during which Ms Cabau reportedly “affirmed the Group’s keenness to return to transiting through the Suez Canal, considering it the shortest and fastest route compared to the Cape of Good Hope”.
According to SCA data, CMA CGM vessels represented 19% of all container ship transits through the canal in the first four months of the year.
According to the eeSea liner database, the French carrier continues to route its standalone LMX service through the canal.
The service deploys six vessels with an average capacity of 29,090 teu and connects Turkey and Lebanon with Saudi Arabia’s Red Sea port of Jeddah and the Middle East Gulf hubs of Dubai and Abu Dhabi.
Despite Trump’s claim that the Houthis had surrendered, most carriers appear to be willing to shun Suez transits for the remainder of the year.
Speaking to analysts during last week’s first-quarter earnings call, Maersk chief executive Vincent Clerc was unequivocal: “Going through something as complex, costly and hard to reverse as a complete redeployment of our shipping networks to go back through the Red Sea, based on news of a deal whose contour we don’t understand, whose terms we don’t understand and which has been breached already, is not responsible.
“This thing around the Houthis, if the US will stop bombing them, that’s good. But whether this means that there is not only safety today, but there is safety for the foreseeable future in us sending our colleagues, our assets and our customers’ cargo to the Red Sea again – we’re pretty far from that threshold,” he added.
