- The EIFFA, part of the Cairo Chamber of Commerce, alerted about the economic fallout and rising shipping expenses due to ongoing Red Sea tensions caused by Houthi attacks on vessels.
- Ship diversions to the Cape of Good Hope route have increased round-trip fuel costs by up to $1 million, potentially destabilizing markets and affecting various goods’ prices.
- Shipping imports via the Bab al-Mandab Strait surged by 170% due to attacks on ships linked with Israel and the US, prompting companies to cease operations in the strait.
- Suez Canal traffic fees contribute about 8% to the Egyptian government’s revenue and a significant portion to foreign currency earnings.
- Indirect effects include increased prices of imported goods due to higher shipping and origin costs, as well as escalated risk insurance expenses or destination changes.
Shipping Route Challenges Amid Red Sea Tensions
The Cairo Chamber of Commerce, through the Egyptian International Freight Forwarding Association (EIFFA), cautioned about the economic repercussions and rising shipping expenses arising from ongoing tensions in the Red Sea due to Houthi attacks on passing vessels. As ships divert away, opting for the longer Cape of Good Hope route, additional costs for fuel may escalate up to $1 million per round trip, potentially impacting market stability and the pricing of various goods.
The cost of shipping imports through the Bab al-Mandab Strait rose by up to 170% due to Houthi attacks on ships affiliated with Israel and the United States, which led shipping companies to halt all their flights through the strait as well.
Moreover, the diversion of ships from the Suez Canal waterway to the Cape of Good Hope, in the far south of Africa, extended the journey between Asia and Europe by about 10-15 days, and doubled the cost of transportation, he revealed.
Impact On Shipping And Egypt’s Revenue
Al-Samdouni said: “We started to be affected by the events in the Red Sea since the beginning of January, as companies with container ships and car transport ships switched to the Cape of Good Hope route instead of passing through the Red Sea and the Suez Canal. This also affects Egypt’s foreign exchange reserves, as the Suez Canal is a major source of foreign currency, which Egypt lacks.”
He added that traffic fees through the Suez Canal account for about 8% of the Egyptian government’s revenues, and provide a large portion of the country’s foreign currency revenues.
He concluded: “There are indirect effects, such as increases in the prices of basic goods and materials, especially those that are imported from abroad, due to higher costs in origin and shipping, and increased risk insurance costs or change of destination.”
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Source: dailynewsegypt
