NewsHouthi attacks severely impact Suez Canal, halving its revenues

Houthi attacks severely impact Suez Canal, halving its revenues

The Suez Canal will be modernized for 60 million dollars.
The Suez Canal will be modernized for 60 million dollars.
Images source: © Adobe Stock | Valeriy Tretyakov
3:44 PM EST, March 9, 2024

The Yemeni Houthi rebels, who support the Palestinian movement Hamas, have been engaging in hostilities with Israel since October 2023. Since December, the Houthis have regularly targeted vessels in the Red Sea. During their latest assault, the bombardment of the ship "True Confidence" resulted in the death of two individuals, as reported by CNN.

These assaults have adversely affected the financial stability of the Suez Canal, a crucial trade passageway and Egypt's link to the Mediterranean Sea. Experts highlight that this route facilitates one-third of the global container traffic and accounts for 40% of trade between Asia and Europe.

Consequently, carriers are increasingly opting for an alternative, longer route around Africa to avoid the Red Sea and the Suez Canal. This detour extends the journey by 10-14 days and adds approximately 3,728 miles.

"Suez Canal revenues have halved," Egyptian Finance Minister Mohammed Maait reiterated, as quoted by the newspaper "Kommiersant".

This downturn represents a severe setback for Egypt's economy, which relies heavily on the canal as a primary source of income. Moreover, the country is contending with the economic fallout from the coronavirus pandemic, conflicts in Ukraine and Israel, and disturbances in Libya and Sudan.

The decline in Suez Canal revenues is part of broader economic difficulties facing Egypt. The AFP reported that in the fiscal year 2022/23, the canal achieved a record $9.4 billion in operations, marking a 35% increase from the preceding period.

This achievement was made possible by the expansion of a new canal segment in 2014-2015, which eased the passage of ships. Despite the expenditure of $8.85 billion on these works, the investment eventually paid off as revenues grew with annual increases in transit rates.

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