(Cairo) More and more ships from around the world are avoiding the Suez Canal due to increasing attacks by Yemeni Houthi rebels, a blow to Egypt which is going through its worst economic crisis, but with limited impact according to experts.
Data from the International Monetary Fund (IMF) is clear: volumes transported via the canal fell by 35% last week compared to the same period in 2023. At the same time, volumes transiting the Cape of Good Hope in South Africa’s markets jumped 67%.
“All Maersk ships transiting the Red Sea and Gulf of Aden will be diverted south around the Cape of Good Hope,” Danish shipping giant Maersk said on Friday, the day US Vice Admiral Brad Cooper recorded “25 attacks on merchant ships” in just under two months.
Since the start of the October 7 war between Israel and the Palestinian Islamist movement Hamas in Gaza, the Israeli army has been shelling the small Palestinian territory. To show their support for Gaza, the Houthis, who are part of the pro-Iranian and anti-Israel “axis of resistance”, are increasing attacks in the Red Sea against commercial ships that they consider linked to Israel.
About 12% of global trade passes through the narrow strip of sea from Yemen to Egypt, according to the International Chamber of Shipping (ICS).
On December 17, the Suez Canal Authority acknowledged that 55 boats had been prevented from transiting. Since then, radio silence.
To the extent that the patrols in the Red Sea of the international maritime coalition led by the United States have failed to reassure, “the players are ready to increase prices”, estimates Paul Tourret, director of the Maritime Industries Observatory ISEMAR.
Increase in fees
“Shipowners had very low prices because of the slowdown in European consumption. They explain that going around Africa is very expensive, but it turns out that it’s about the same price, because what they spend on oil, they save on transit fees paid to the Egyptians, assures still the expert at AFP.
The American think tank Soufan Center lists “at least 18 major maritime carriers having chosen to avoid the Red Sea” and therefore adding “around ten days of travel”, and as many filling of fuel tanks.
Despite everything, an increase in costs has been absorbed, experts unanimously assure.
“Transport costs have increased almost threefold since the start of the Houthi attacks,” notes the Soufan Center, but “they remain lower than during the COVID-19 pandemic.”
And for Egypt, revenues from the Suez Canal reached 749 million dollars in December 2023, compared to 737 in December 2022, welcomes the Canal Authority – an immense work inaugurated in 1869 which reported on the fiscal year 2022 -2023 approximately $8.6 billion.
While these foreign exchange receipts are closely monitored in a country where importers and money changers are now struggling to find dollars, a port official wants to be reassuring: “The crisis is temporary” and still “at an acceptable level”, he told AFP on condition of anonymity. “But its impact will grow if it lasts,” he agrees.
“Social pressure cooker”
In 2015, President Abdel Fattah al-Sissi inaugurated his first mega-project: a new section of the canal intended to facilitate the crossing of ships. It absorbed nearly eight billion euros without, however, allowing a massive increase in revenues, only obtained each year by increasing transit costs.
But canal revenues are only part of Egypt’s foreign exchange earnings. Combined with tourism revenues, they represent only half of the country’s real windfall: remittances from Egyptian workers abroad.
On the other hand, debt service is exploding: more than 60% of state revenues in 2023 and 70% in 2024, according to the European Bank for Reconstruction and Development (EBRD).
For Mr. Tourret, “canal revenues also serve to keep the lid on the social pressure cooker” in Egypt, where two thirds of the population is poor or on the verge of being poor.
“They directly feed the State which reinvests them in the army and social welfare. It’s a real shortfall, one month is acceptable, but two months will be worrying,” he says.