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Monday, 17 August 2020

Maersk hikes letters of guarantee in “crippling” move for freight companies

Maersk said to hike letters of guarantee requirement in “crippling” move for freight companies: Maersk is set to increase the value of the letters of guarantee it demands of transportation companies by as much as twelve-fold in a move that threatens to cripple the sector, Al Mal reports. The global shipping firm currently requires a EGP 250k guarantee for any container it transfers to local contractors, but will now hike this to EGP 1 mn for containers of dry goods (with a bank check of EGP 2 mn), and EGP 3 mn for refrigerated containers (with a bank check of EGP 6 mn) from the beginning of September.

The move could put many freight companies out of business, said El Sayed El Mekkawi, head of the Land Transport Division at the Alexandria Chamber of Commerce, who described the decision as “crippling.” The Danish company accounts for around 30% of shipping activity in Egypt’s ports, making it a vital partner for many of the country’s transportation firms.

We reached out to Maersk for comment and haven’t heard back, but will keep our eye on the story in the coming weeks.

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