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Al-Ahram Weekly
19 hours ago
- Business
- Al-Ahram Weekly
Downbeat prospects for the Suez Canal - Economy - Al-Ahram Weekly
Losses in revenue from the Suez Canal are likely to grow this year with the escalating tensions in the region in the wake of the Israel-Iran war. In the year and a half after Israel's war on Gaza began in October 2023, the Suez Canal lost around $8 billion in revenues. Houthi group attacks in the Red Sea in solidarity with the Palestinians against the Israeli war on Gaza also caused major shipping lines to divert their route through the Suez Canal to the longer one around the Cape of Good Hope. Egypt has lost 'approximately $800 million in monthly revenues from the Suez Canal, with a total aggregate amount of $8 billion, since the beginning of Israel's war on Gaza,' wrote Foreign Minister Badr Abdelatty in an article in the British maritime publication Lloyd's List in May. The canal brought in an unprecedented $9.4 billion in revenues in fiscal year 2022-23. It is one of Egypt's main sources of foreign currency, and a decline in its revenues will put pressure on the country's foreign-exchange reserves, likely causing the dollar to strengthen against the Egyptian pound, Karim Adel, head of the Al-Adl Centre for Economic and Strategic Studies, told Al-Ahram Weekly. Mohamed Anis, an economic expert, told the Weekly that the Bab Al-Mandeb Strait which links the Red Sea to the Indian Ocean cannot support additional tensions that negatively affect the global shipping companies' passage through the strait. This Israel-Iran war adds to the pressure on Suez Canal revenues and therefore the Egyptian economy. The Bab Al-Mandeb is a vital trade route between the Mediterranean and Asia. Vessels carrying goods between Europe and Asia, as well as oil from the Middle East to Europe and North America, pass through it when navigating the Suez Canal. Anis added that lower maritime traffic through the canal is expected to have a significant impact on revenues, forecasting that they will shrink to $2.5 billion in 2025. In 2024, revenues stood at $3.9 billion, he said. Moreover, with the flare-up of further conflict in the region, reducing Suez Canal transit fees may no longer be effective in attracting shipping companies back to the route, as many have shifted to the Cape of Good Hope, he explained. In May, the Suez Canal Authority (SCA) announced a 90-day 15 per cent discount on transit fees for container ships with a net tonnage of 130,000 tons or more, whether loaded or empty. The discount was meant to encourage the shipping companies to gradually return to the Suez Canal following a brief ceasefire in Gaza and a truce between the US and the Houthis. Another worrying factor is the possibility of the closure of the Strait of Hormuz. This is the primary export route for Gulf oil, which accounts for about 20 per cent of global oil supplies. It is also critical for natural gas exports, with Qatar controlling a large portion of the Gulf's 30 per cent share, Anis said. He warned that any consequences of the Israel-Iran war affecting the Strait of Hormuz could severely disrupt the global oil trade, creating a sharp supply shortfall and driving up prices from the cost of crude itself to shipping and operational expenses. Oil prices could reach $120 per barrel should the US intervene militarily against Iran and the strait be completely closed, removing approximately four million barrels per day from the global market, Anis said. Trade volumes through the strait exceed $1 trillion annually, with over 2.5 billion tons of cargo passing through each year, Adel said. Raw materials such as grain, iron ore, and cement account for 22 per cent, while the container trade carrying finished goods to the Gulf countries makes up about 20 per cent. * A version of this article appears in print in the 19 June, 2025 edition of Al-Ahram Weekly Follow us on: Facebook Instagram Whatsapp Short link:
Straits Times
06-06-2025
- Business
- Straits Times
Red Sea passage remains a no-go for shipping despite US action
The USS Dwight D. Eisenhower aircraft carrier in the Red Sea, during operations against the Houthi militia in Yemen, on Feb 21, 2024. PHOTO: KENNY HOLSTON/NYTIMES The largest commercial shipping companies continue to avoid the Red Sea and the Suez Canal, despite a recent ceasefire agreement between the United States and Houthis intended to make the trade lanes safer. The ceasefire, which began May 6, ended a US campaign that involved more than 1,100 strikes against the Houthis in Yemen and became a source of embarrassment for the Trump administration after group chats about the strikes inadvertently became public. The Pentagon had planned on a monthslong bombardment, but President Donald Trump ended it after about 50 days. 'If the intention was to restore freedom of navigation, which is what they stated it was, then the results speak for themselves: The shipping industry has not gone back,' said Mr Richard Meade, editor-in-chief of Lloyd's List, a shipping publication. Ship traffic through the Red Sea is down by around three-fifths since 2023 when the Houthis started targeting ships there in solidarity with Hamas in its war with Israel in the Gaza Strip, Mr Meade said. Fearing that their vessels would be struck, big shipping companies avoided the Red Sea and the Suez Canal, taking a much longer route around the southern tip of Africa to travel between Asia and Europe. The Houthis have said they are still at war with Israel and will attack vessels bound for the country. And though the Houthis have not attacked a commercial vessel since December, shipping companies say they worry that their vessels may be hit, deliberately or mistakenly, and have no plans to sail the southern part of the Red Sea anytime soon. 'We're pretty far from the threshold,' said Mr Vincent Clerc, the CEO of A.P. Moller-Maersk, a large shipping line based in Copenhagen, Denmark. Speaking soon after the ceasefire in May, he said the Red Sea would have to remain safe for the foreseeable future before the company's vessels returned. Shipping executives said they also feared a severe disruption to their networks if they returned to the Red Sea but suddenly had to pull out of the region because attacks resumed. When Mr Trump started the military engagement with the Houthis in March, he said their attacks on shipping had cost the global economy 'BILLIONS of dollars.' Commenting on the ceasefire, he said, 'They say they will not be blowing up ships anymore.' Oman brokered the ceasefire between the Houthis and the United States. Describing the truce, Oman's foreign minister said that 'neither side will target the other, including American vessels, in the Red Sea and Bab al-Mandab Strait, ensuring freedom of navigation and the smooth flow of international commercial shipping.' But maritime analysts said it was unclear whether the ceasefire applied just to American ships. 'Was this only an agreement between the Americans and the Houthis not to fire at each other's military capabilities, or was this something that did indeed also cover the merchant ships going through the area?' asked Mr Jakob Larsen, chief safety and security officer at BIMCO, a shipping trade group. Nor did the ceasefire appear to involve the Houthis' conflict with Israel. The Houthis expanded their attacks on Israel in May to include vessels at or on their way to Haifa, an Israeli port, noted Mr Jack Kennedy, head of country risk for the Middle East and North Africa at S&P Global Market Intelligence. And while the Houthis are unlikely to attack American vessels during their ceasefire, 'the unclear designations around a vessel or company's relationship to Israel and Israeli ports, and uncertainties around Houthi targeting accuracy, mean there is a severe risk to ships transiting the Red Sea,' Mr Kennedy said. In an email to The New York Times, the Houthi-linked group that communicates with the shipping industry said that 'no guarantees can be provided to shipping companies.' The group added: 'Sanctions and prohibitions are limited exclusively to companies and vessels affiliated with or linked to' Israel. The group also said the Yemeni armed forces' actions 'are carried out through a precise mechanism designed to prevent mistakes.' The White House and the Pentagon did not comment. Even though the route around Africa uses more fuel and crews are at sea for longer, shipping operations have adapted to the detour. 'If it were really a pain, if this new route was really imposing costs, I think you might see more countries willing to take the risk,' said Ms Jennifer Kavanagh, director of military analysis at Defense Priorities, a research institute that favours restraint in foreign policy. In fact, traveling longer distances has allowed the shipping lines to deploy the glut of new ships that they ordered during the pandemic trade boom. Before the Red Sea attacks, the supply of new vessels threatened to depress shipping rates and the earnings of shipping companies. 'Frankly, this disruption, this long way round, has allowed the industry to a certain extent to defy economic gravity,' Mr Meade said. Still, one large shipping company, CMA CGM, based in Marseilles, France, has been sending a small number of vessels through the Red Sea. Ship tracking sites showed that, in recent weeks, at least five had been in the southern part of the Red Sea, near Yemen. But CMA CGM said in a statement that it did 'not plan to resume transits through the Suez Canal on a large scale in the short term, unless security conditions allow it.' The rerouting of vessels away from the Red Sea has deprived Egypt of billions of much-needed dollars in toll revenue from the Suez Canal. To coax shipping companies back, the canal is offering large vessels a 15 per cent discount to go through the canal. NYTIMES Join ST's Telegram channel and get the latest breaking news delivered to you.
Miami Herald
05-06-2025
- Business
- Miami Herald
Red Sea Passage Remains a No-Go for Shipping Despite U.S. Action
The largest commercial shipping companies continue to avoid the Red Sea and the Suez Canal, despite a recent ceasefire agreement between the United States and Houthis intended to make the trade lanes safer. The ceasefire, which began May 6, ended a U.S. campaign that involved more than 1,100 strikes against the Houthis in Yemen and became a source of embarrassment for the Trump administration after group chats about the strikes inadvertently became public. The Pentagon had planned on a monthslong bombardment, but President Donald Trump ended it after about 50 days. 'If the intention was to restore freedom of navigation, which is what they stated it was, then the results speak for themselves: The shipping industry has not gone back,' said Richard Meade, editor-in-chief of Lloyd's List, a shipping publication. Ship traffic through the Red Sea is down by around three-fifths since 2023 when the Houthis started targeting ships there in solidarity with Hamas in its war with Israel in the Gaza Strip, Meade said. Fearing that their vessels would be struck, big shipping companies avoided the Red Sea and the Suez Canal, taking a much longer route around the southern tip of Africa to travel between Asia and Europe. The Houthis have said they are still at war with Israel and will attack vessels bound for the country. And though the Houthis have not attacked a commercial vessel since December, shipping companies say they worry that their vessels may be hit, deliberately or mistakenly, and have no plans to sail the southern part of the Red Sea anytime soon. 'We're pretty far from the threshold,' said Vincent Clerc, the CEO of A.P. Moller-Maersk, a large shipping line based in Copenhagen, Denmark. Speaking soon after the ceasefire in May, he said the Red Sea would have to remain safe for the foreseeable future before the company's vessels returned. Shipping executives said they also feared a severe disruption to their networks if they returned to the Red Sea but suddenly had to pull out of the region because attacks resumed. When Trump started the military engagement with the Houthis in March, he said their attacks on shipping had cost the global economy 'BILLIONS of dollars.' Commenting on the ceasefire, he said, 'They say they will not be blowing up ships anymore.' Oman brokered the ceasefire between the Houthis and the United States. Describing the truce, Oman's foreign minister said that 'neither side will target the other, including American vessels, in the Red Sea and Bab al-Mandab Strait, ensuring freedom of navigation and the smooth flow of international commercial shipping.' But maritime analysts said it was unclear whether the ceasefire applied just to American ships. 'Was this only an agreement between the Americans and the Houthis not to fire at each other's military capabilities, or was this something that did indeed also cover the merchant ships going through the area?' asked Jakob Larsen, chief safety and security officer at BIMCO, a shipping trade group. Nor did the ceasefire appear to involve the Houthis' conflict with Israel. The Houthis expanded their attacks on Israel last month to include vessels at or on their way to Haifa, an Israeli port, noted Jack Kennedy, head of country risk for the Middle East and North Africa at S&P Global Market Intelligence. And while the Houthis are unlikely to attack American vessels during their ceasefire, 'the unclear designations around a vessel or company's relationship to Israel and Israeli ports, and uncertainties around Houthi targeting accuracy, mean there is a severe risk to ships transiting the Red Sea,' Kennedy said. In an email to The New York Times, the Houthi-linked group that communicates with the shipping industry said that 'no guarantees can be provided to shipping companies.' The group added: 'Sanctions and prohibitions are limited exclusively to companies and vessels affiliated with or linked to' Israel. The group also said the Yemeni armed forces' actions 'are carried out through a precise mechanism designed to prevent mistakes.' The White House and the Pentagon did not comment. Even though the route around Africa uses more fuel and crews are at sea for longer, shipping operations have adapted to the detour. 'If it were really a pain, if this new route was really imposing costs, I think you might see more countries willing to take the risk,' said Jennifer Kavanagh, director of military analysis at Defense Priorities, a research institute that favors restraint in foreign policy. In fact, traveling longer distances has allowed the shipping lines to deploy the glut of new ships that they ordered during the pandemic trade boom. Before the Red Sea attacks, the supply of new vessels threatened to depress shipping rates and the earnings of shipping companies. 'Frankly, this disruption, this long way round, has allowed the industry to a certain extent to defy economic gravity,' Meade said. Still, one large shipping company, CMA CGM, based in Marseilles, France, has been sending a small number of vessels through the Red Sea. Ship tracking sites showed that, in recent weeks, at least five had been in the southern part of the Red Sea, near Yemen. But CMA CGM said in a statement that it did 'not plan to resume transits through the Suez Canal on a large scale in the short term, unless security conditions allow it.' The rerouting of vessels away from the Red Sea has deprived Egypt of billions of much-needed dollars in toll revenue from the Suez Canal. To coax shipping companies back, the canal is offering large vessels a 15% discount to go through the canal. This article originally appeared in The New York Times. Copyright 2025
Egypt Independent
26-05-2025
- Business
- Egypt Independent
FM stresses restoring maritime stability in Red Sea, Suez Canal serves global economy
CAIRO, May 24 (MENA) – Foreign Minister Badr Abdelatty emphasized that the resumption of regular maritime traffic in the Red Sea and Suez Canal serves the global economy, particularly in light of recent geopolitical challenges that have affected navigation with Egypt bearing heavy economic cost. His remarks were made in an opinion article published in Lloyd's List, a leading international journal specializing in maritime shipping and logistics. Abdelatty highlighted the impact of de-escalation efforts in the Red Sea region on improving maritime safety, international trade and resilience of global supply chains. The article reaffirmed Egypt's firm commitment to ensuring regional security and stability. 'In the meantime, we must simultaneously address the root cause of regional escalation in order to preserve the current state of stability in the Red Sea. As such, Egypt will continue to exert its utmost efforts to achieve a permanent ceasefire in Gaza and establish a political horizon that fosters peace and security between both Palestinians and Israelis,' the foreign minister wrote. (MENA)
Middle East
24-05-2025
- Business
- Middle East
OPEN// FM stresses restoring maritime stability in Red Sea, Suez Canal serves global economy
CAIRO, May 24 (MENA) - Foreign Minister Badr Abdelatty emphasized that the resumption of regular maritime traffic in the Red Sea and Suez Canal serves the global economy, particularly in light of recent geopolitical challenges that have affected navigation with Egypt bearing heavy economic cost. His remarks were made in an opinion article published in Lloyd's List, a leading international journal specializing in maritime shipping and logistics. Abdelatty highlighted the impact of de-escalation efforts in the Red Sea region on improving maritime safety, international trade and resilience of global supply chains. The article reaffirmed Egypt's firm commitment to ensuring regional security and stability. "In the meantime, we must simultaneously address the root cause of regional escalation in order to preserve the current state of stability in the Red Sea. As such, Egypt will continue to exert its utmost efforts to achieve a permanent ceasefire in Gaza and establish a political horizon that fosters peace and security between both Palestinians and Israelis," the foreign minister wrote. (MENA) M H K/M N E
