Egypt Offers 15% Suez Canal Discount to Regain Trade Flow

Egypt introduces a 15 percent discount on Suez Canal transit fees to offset trade losses from Red Sea disruptions. A look at the background, impact, and implications for global business.

The Suez Canal Authority (SCA) announced a 15 percent discount on transit fees for container ships with net tonnage of at least 130,000 metric tons, effective May 15, 2025, and valid for 90 days. This move comes in the wake of declining revenues and traffic due to security challenges in the Red Sea, which prompted major shipping lines to reroute vessels via the Cape of Good Hope. Egypt’s strategic discount aims to restore confidence in the canal’s viability as a critical maritime route.

Background: Security disruptions and declining trade

The commercial importance of the Suez Canal was sharply tested beginning in late 2023, as escalating hostilities in the Red Sea region disrupted maritime traffic. Houthi rebels in Yemen began targeting vessels linked to Israel and its allies, creating significant safety concerns for global shipping firms. As tensions rose, many of the world’s largest container lines opted to avoid the Suez Canal entirely, redirecting vessels around the Cape of Good Hope. While this detour increased fuel consumption and extended delivery timelines by 10 to 14 days, it offered a safer alternative amid the risk of missile attacks and drone strikes.

The impact on Egypt’s trade infrastructure was immediate and stark. Canal traffic fell by nearly half, from 26,434 vessels in 2023 to just 13,213 in 2024. The overall cargo volume moving through the canal shrank even more dramatically, down 66.6 percent year-over-year. Container and LNG ships saw the steepest declines, falling by 88.6 percent and 85.7 percent respectively. These figures underscore the extent to which rerouting has affected Egypt’s strategic waterway.

The economic fallout has been severe. Suez Canal revenues dropped from US$10.3 billion in 2023 to just US$4 billion in 2024, marking a loss of over US$6 billion in annual earnings. On a monthly basis, the downturn translated into losses of approximately US$800 million. By Q4 Calendar Year (CY) 2024, earnings had plummeted to US$880.9 million, down from US$2.4 billion in the same period the year before. This collapse in revenue has placed increased pressure on Egypt to act decisively to restore confidence in the canal’s safety and viability.

The 15% discount: Incentive amid fragile truce

The discount policy was introduced days after the United States brokered a partial ceasefire with the Houthis. Although the ceasefire excludes Israeli-linked ships, the agreement led to optimism within Egypt that traffic could soon resume.

Egypt is targeting large container vessels, a major revenue stream, with its 15 percent toll reduction. The discount applies to container ships over 130,000 metric tons, whether laden or in ballast. It seeks to make up for higher insurance premiums, war-risk surcharges, and security expenses currently associated with transiting the Red Sea.

Investments and navigational improvements

Amid the downturn, Egypt pressed ahead with strategic infrastructure upgrades. In early 2025, the SCA completed a 10-kilometer expansion near Little Bitter Lake, extending the two-way channel to 82 kilometers of the total 193-kilometer canal. The upgraded segment aims to reduce the risk of blockage, such as the Ever-Given incident in 2021, and improve vessel flow.

The SCA also confirmed new navigational charts and coordinated with the Egyptian Navy to assure shipping companies of heightened security monitoring.

Comparative trade routes: Suez Canal vs. Cape of Good Hope

While the Suez Canal traditionally handles 12 to 15 percent of global trade, including nearly 30 percent of global container movement and 8 to 9 percent of energy flows, alternative routes have gained traction. In May 2025, Bab el-Mandeb Strait saw a spike in daily Transit Trade Volume (TTV) to over 11 million metric tons, compared with just over 1 million metric tons a year ago. In contrast, the Cape of Good Hope saw traffic moderate slightly but remain high, at 4.3 million metric tons daily.

Despite longer voyage durations, 10 to 14 days extra, and increased fuel costs, many shipping firms adapted to the Cape route. Danish shipping giant Maersk reported a sharp rise in profitability in Q1 2025, with Earnings Before Interest and Taxes (EBIT) soaring to US$1.3 billion from US$177 million a year ago. It credited improved freight rates and high vessel utilization (92 percent), even as risks in the Red Sea persisted.

Implications for global businesses and exporters

For exporting nations and global supply chains, the Suez Canal remains a critical artery. Europe-Asia trade, which comprises substantial volumes of containerized goods, petrochemicals, and energy cargo, relies heavily on the Suez route for timely deliveries. The Red Sea disruptions led to widespread rerouting, causing freight rates to soar and transit times to lengthen across continents, with ripple effects felt from Southeast Asia to Northern Europe and the U.S. East Coast.

Meanwhile, the 15 percent discount may not immediately lure back all carriers. Shipping companies that have optimized their operations around the Cape route are likely to demand sustained security assurances before resuming Suez-bound transits. Some analysts remain skeptical. Arturo Regalado, LNG and Gas Analyst at Kpler, noted that “even if the truce is a step in the right direction, many players will remain cautious until there’s consistent evidence that navigation is truly safe.”

Still, the discount underscores Egypt’s resolve to reassert the Suez Canal’s centrality in global trade logistics. By combining price reductions with infrastructure upgrades and multilateral engagement, the SCA is attempting to restore normalcy and recover lost revenue.

In short

With the canal’s expansion operational and security dialogues ongoing, Egypt is betting that a mix of incentives and improvements can slowly bring trade back to the canal’s waters. For businesses, investors, and governments reliant on efficient maritime routes, these developments will remain closely watched in the months ahead.

Also read: Egypt’s Tax Reforms: Boosting Business Confidence and Export Growth

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