Houthi attacks on merchant vessels cause alarming 50% plunge in Suez Canal revenues
It has been noted that revenues from the Suez Canal have plunged by 40-50% since the onset of the year, as voiced by President Abdel Fattah al-Sisi, with the "Al Ahram" daily being the source of this information. The primary cause behind this drastic drop is considered to be the continuous attacks on vessels by Yemen's Houthi rebel tribe, which is backed by Iran.
7:21 PM EST, February 20, 2024
Egypt bearing the brunt of Houthi offences
This situation has inevitably dealt a significant blow to Egypt's financial stability. The Suez Canal has always been one of the country's chief revenue sources, which is already grappling with the economic repercussions of the coronavirus pandemic, in addition to the wars in Ukraine and Israel, along with strife in Libya and Sudan.
The dwindling revenues from the Suez Canal exemplify the larger economic challenges that the country is grappling with. As reported by rp.pl via AFP, despite the prevailing hardships, the last financial year of 2022/23 saw the country witnessing a record $9.4 billion inflow from the canal's operation, indicating an improvement of 35% from the previous period.
Such a feat was achievable owing to the deepening of a new section in 2014-15, which made passage easier for vessels. These operations ate up approximately 8 billion euros; nonetheless, the surge in new revenues didn't materialize immediately. Instead, they increased in frequency with each subsequent year's increase in transit rates.
Houthi assault on ships within the Red Sea
Yemeni Houthi rebels have been terrorizing merchant vessels in the Red Sea since mid-November 2023. They assert that they only target those associated with Israel and, of late, the United States and Great Britain. They are bent on ramping up the pressure on Benjamin Netanyahu's far-right governing body.
As was written in money.pl, the disruptive actions of the Houthis represent a significant setback to international trade. The Red Sea is one of the primary routes for this purpose. As per expert opinion, this route is responsible for one-third of the world's container traffic and 40% of trade between Asia and Europe.
Consequently, carriers are increasingly veering away from the shortest route from Asia to Europe, which extends through the Indian Ocean, Red Sea, and Suez Canal. Instead, they are gravitating towards a roundabout path around Africa. But this happens to be a longer route by approximately 10-14 days and about 3728 miles.
