Suez Canal shipping volumes drop 55% in a week as Red Sea crisis continues
Shipping volumes through the Suez Canal more than halved last week, while commercial transport on the alternative route around the Cape of Good Hope surged amid attacks on cargo vessels by Houthis on the Red Sea.
The strikes by the Yemeni rebel group have forced major shipping companies to divert away from the key global trade artery.
Shipping volumes transiting through Egypt’s Suez Canal in the week that ended on February 13 dropped 55 per cent from the same period a year ago, while volumes around the Cape of Good Hope rose nearly 75 per cent, according to the latest data from PortWatch.
The figures from the International Monetary Fund’s platform underscore the continuing effects of the shipping crisis in the Red Sea, which has dragged on for three months with no end in sight.
Many shipping companies have rerouted their vessels away from the Red Sea to avoid the attacks, opting instead for the longer and more expensive route around the Cape of Good Hope in South Africa.
The Suez Canal is the shortest sea route between Asia and Europe and accounts for about 12 per cent of the world’s shipping traffic.
Vessels crossing the Suez Canal decreased by an estimated 42 per cent compared with its peak, the UN trade arm Unctad said in a report last week.
With major players in the shipping industry temporarily diverting vessels from the Suez, weekly container ship transits have fallen by 67 per cent, Unctad said. Container carrying capacity, tanker transits and gas carriers have also experienced significant declines.
The diversion “is having both an economic and environmental cost, also representing additional pressure on developing economies,” it said.
The declining Suez Canal shipping volumes, and the ensuing drop in revenue, is the latest headache for Egyptian authorities already grappling with economic challenges.
Income from the waterway last month dropped to $428 million, compared to $804 million in January 2023, Osama Rabie, chairman of the Suez Canal Authority, said. The number of ships passing through the Suez Canal fell to 1,362 vessels last month, down 36 per cent compared with the 2,155 vessels that crossed the canal during January 2023, Mr Rabie said.
Houthi militants in Yemen began attacking commercial vessels in solidarity with Palestinians in the Israel-Gaza war, and show no signs of retreating despite the US and Western allies attempting to deter the Iranbacked group with air strikes.
Before the Israel-Gaza war, Egypt was collecting about $700 million per month in Suez Canal transit fees, the IMF’s managing director Kristalina Georgieva said this month.
However, the country is now losing “hundreds of millions of dollars” each month because of the Houthi attacks on shipping in the Red Sea.
The canal is a crucial source of foreign currency for Egypt. The North African economy, already grappling with record inflation and a heavy debt burden, has been hit hard by the Gaza war, which has also slowed tourism.
Egypt and the IMF “continue to make excellent progress” on the talks for a comprehensive support package for the North African economy, IMF spokeswoman Julie Kozack said last week.
“The IMF team and the Egyptian authorities have agreed on the main elements of a programme,” she said.
“We’re working very closely with both the Egyptian authorities and their partners to ensure that Egypt does not have any residual financing needs and also to ensure that the programme is able to … ensure macroeconomic and financial stability in Egypt,” she said, when asked about the potential effect of refugees moving from Gaza into Egypt.