Egypt’s Suez Canal Revenues Plummet Amid Red Sea Tensions

Revenues from Egypt’s Suez Canal have plunged to USD 7.2 billion (EGP 347.4 billion) for the fiscal year 2023/2024, down from USD 9.4 billion (EGP 453.5 billion) in the previous year, amid escalating tensions in the Red Sea, announced Osama Rabie, Chairman of the Suez Canal Authority (SCA), during a meeting with on Thursday.

Rabie revealed that 20,148 ships, transporting a net of one billion tons, traversed the canal in FY 2023/2024, which ended on 30 June. This is a significant decrease from the 25,911 ships, carrying 1.5 billion tons, recorded in FY 2022/2023.

Rabie attributed the decline to security challenges in the Red Sea, which have driven many ship owners and operators to seek alternative routes. This was emphasized during his discussion with Michael Corella, Commander of the United States Central Command, at the SCA headquarters in Ismailia.

The tensions have escalated due to recurrent attacks by the Houthis on vessels associated with Israel, the US, and the UK near the critical Bab El-Mandeb Strait. The Houthis, who control much of Yemen but lack international recognition, claim these attacks aim to pressure Israel to cease its conflict in the Gaza Strip.

These security issues have led numerous shipping companies to bypass the Suez Canal in favor of the longer route around the Cape of Good Hope. This canal, once a conduit for 12 percent of global trade, now faces a downturn.

Rabie noted that the broader maritime transport market, global trade movements, and supply chains have been adversely affected by the Red Sea tensions. He argued that despite the current crisis, there is no true alternative to the Suez Canal, as alternative routes have resulted in longer trip durations and higher operational costs.

Rabie also highlighted the environmental toll of these alternative routes, including increased carbon emissions, port congestion, and delayed deliveries.

In response to the crisis, the SCA plans to introduce a range of new navigation services to assist its customers and mitigate the impact of the prevailing conditions.

During the meeting, Corella praised the SCA’s efforts in managing the crisis and addressing the repercussions of the Red Sea security challenges. US Ambassador to Cairo Herro Mustafa Garg, also in attendance, underscored the importance of restoring regional stability to ensure the continuity of global supply chains and trade.

The Suez Canal remains a crucial source of hard currency for Egypt. This man-made waterway, linking the Mediterranean and Red Seas, serves as the shortest maritime route between Asia and Europe and the fastest passage from the Atlantic to the Indian Ocean.