(MENAFN) The Suez Canal, a vital maritime artery connecting the Mediterranean and the Red Sea, is grappling with a significant economic downturn as revenues recorded a sharp 40 percent year-on-year decline in the first eleven days of 2024, according to Osama Rabie, head of the canal authority. Ship traffic through the canal also experienced a substantial 30 percent drop during the same period compared to the previous year, with the number of ships decreasing from 777 in 2023 to 544 in 2024.
Rabie revealed these alarming statistics during a talk show, highlighting the challenges faced by the Suez Canal, a critical source of foreign currency for Egypt. The decline in ship traffic has raised concerns about the economic impact on the country, as the canal plays a pivotal role in facilitating global trade by providing a shorter route between Europe and Asia.
The canal authority head emphasized that the extended period for cargo transportation has increased by at least two weeks, resulting in escalating costs for the delivery of goods and insurance. Rabie dismissed the notion of using the Cape of Good Hope as a viable alternative route, citing safety concerns, adverse weather conditions, and the prolonged duration of the journey. Navigating around the African continent, he noted, adds up to 15 days compared to passing through the Suez Canal.
The economic challenges faced by the Suez Canal come despite recent efforts by the Egyptian government to enhance revenues by allowing more commercial vessels to utilize the route. The canal underwent expansion in 2015, with ongoing enlargement projects aimed at accommodating larger vessels and further boosting its economic contribution to Egypt.
In the fiscal year 2022-2023, the Suez Canal achieved an all-time high annual revenue of USD9.4 billion, up from USD7 billion the previous year. During that period, a record-breaking 25,887 ships carrying 1.5 billion tons of cargo transited through the canal. However, the current decline in revenues and ship traffic raises questions about the economic sustainability of the Suez Canal and its ability to overcome the challenges posed by changing global trade dynamics.
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