- The Suez Canal, a vital waterway for global trade, has seen its annual revenue plummet by 23.4% due to security concerns in the Red Sea.
- This information was revealed by Osama Rabie, chairman of the Suez Canal Authority (SCA), in a statement released on July 18th.
The canal’s revenue for the fiscal year 2023/2024, which ended in June, reached US$7.2 billion (S$9.6 billion). This marks a significant decline from the US$9.4 billion earned the previous year. The number of ships transiting the canal also dropped, falling from 25,911 in 2022/2023 to 20,048 in the past fiscal year.
Red Sea Security Blamed
Chairman Rabie attributed the decline to security challenges in the Red Sea. These concerns have prompted many ship owners and operators to choose alternative routes, bypassing the Suez Canal. Rabie emphasized that the ongoing tensions not only impact the canal itself but also disrupt the broader maritime transportation market, trade flows, and international supply chains. Opting for alternative routes lengthens voyage times and increases operational costs.
Houthi Activity a Disrupting Factor
Since November 2023, Yemen’s Houthi rebel group has targeted vessels in the Red Sea that they suspect are linked to Israel. These actions are seen as a show of support for Palestinians during the recent conflict in Gaza.
The Suez Canal’s Importance
The Suez Canal serves as a critical passage for roughly 12% of global trade, making it a major source of foreign currency for Egypt. The country is still grappling with persistent economic difficulties, highlighting the importance of a stable and functioning canal.
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Source: The Strait Times
