- Egypt Loses $6 Billion as Red Sea Crisis Cuts Canal Traffic.
- IMF Warns of Further Revenue Drop for Egypt’s Suez Canal.
- Ship Rerouting via Cape of Good Hope Halves Canal Transits.
The Suez Canal, a vital source of hard currency for the Egyptian government, has seen its revenues plummet by a staggering 62.6% in the first 11 months of 2024 compared to the same timeframe in 2023, as reported by the IMF. In real terms, this means Egypt lost around $6 billion in revenue during that period, reports Port News.
Red Sea Disruptions Behind Revenue Drop
The main reason for this drop is the disruption of shipping routes in the Red Sea, which began after Houthi rebels launched attacks on civilian vessels starting in late November 2023. By May 2024, the volume of transit through the canal had decreased to approximately one-third of its pre-conflict level. Consequently, many shipping operators chose to reroute their vessels around the Cape of Good Hope, even though it meant incurring higher operational costs and longer delivery times.
Fiscal Impact on Egypt’s Economy
This revenue loss has put a significant strain on Egypt’s fiscal health. In the latter half of the 2023/2024 fiscal year, tax revenues linked to the canal were cut by more than half, contributing to a 0.6% dip in GDP.
The IMF anticipates that the decline in canal income will continue. They project revenues will drop from $6.6 billion in FY 2023/2024 to about $3.6 billion in FY 2024/2025.
Shipping Volume Slashed by Half
Data from the Associated Press reveals that the number of ship transits fell from over 26,000 in 2023 to roughly 13,200 in 2024. This significant decrease is largely due to the Houthi attacks and the rerouting decisions made by major global shipping companies.
Rerouting Drives Up Operational Costs
Shipping giants like Maersk, MSC, CMA CGM, and COSCO have opted to avoid the Suez Canal, redirecting their vessels around the Cape of Good Hope. This longer journey has resulted in a sharp increase in insurance premiums, fuel costs, and delivery times, typically adding 10 or more days to each trip, which directly impacts the canal’s revenue.
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Source: Port News
