Kiel Canal needs flexible dues system, study suggests

The creation of a flexible Kiel Canal dues system would ensure that shipping companies choose the route through the canal, a new study found.

Conducted by the Kiel Institute for World Economy (IfW), the study on the economic benefits of the Kiel Canal suggested such a system which includes the development of the bunker price, as a necessary and sustainable measure.

“If shipping companies are forced to choose the route around Skagen due to cost pressure, everyone involved loses, because firstly there is no economic benefit for the Federal Republic and, secondly, the environment would be unnecessarily polluted by the longer journeys around Skagen,” Jens B. Knudsen, Chairman of the Kiel Canal Initiative, said.

The passage dues on the canal are currently suspended until 31 December 2021. The federal government opted for this move in an effort to keep the Kiel Canal competitive.

At the beginning of the second quarter of 2020, the canal experienced a drop in traffic figures of up to 40 per cent as a result of the coronavirus pandemic.

In order not to risk another steep drop in the Kiel Canal traffic numbers, Knudsen proposes a reduced passage due from January 1, 2022, as a temporary solution.

“A tariff increase from 0% to 100% would come as a shock to the Kiel Canal,” Knudsen emphasized.

The risk is omnipresent that considerable traffic in the Kiel Canal would break away and the economic benefit for the Federal Republic of Germany of annually EUR 560 million generated by the Kiel Canal would be noticeably reduced. In Knudsen’s view, this cannot be in the interests of politics, administration and the maritime industry.

“In the long term, a flexible dues system that reacts to changes in fuel costs for ships is a very sensible and overdue solution,” said the chairman of the Kiel Canal Initiative.

Until then, he suggests an interim solution with a 50% reduction on the Kiel Canal passage dues.