Egypt’s Suez Canal Revenues Plummet as Red Sea Crisis Persists

The Red Sea crisis, now over six months old, has had a significant impact on Egypt’s Suez Canal, with the economic repercussions becoming increasingly evident. Recent data reveals a 64.3 percent drop in Suez Canal revenues, falling to approximately $337.8 million in comparison to the $648 million recorded in May 2023. Ship traffic through the canal also saw a decline, with only 1,111 vessels passing through in May compared to 2,396 ships during the same period last year. Cargo volume passing through the canal decreased by 68.5 percent to about 44.9 million tons last month, down from 142.9 million tons in May 2023.

As the Houthi attacks on merchant ships in the Red Sea persist, major ocean carriers have opted to bypass the Suez Canal, choosing the longer route around Africa instead. Egypt’s Finance Minister Mohamed Maait initially believed that the Suez Canal revenue loss could be offset by the previous year’s exceptional performance, which reached a record-breaking $9.4 billion. However, Maait now warns that prolonged tensions in the Red Sea could lead to further revenue losses, placing a strain on the state treasury.

To enhance the competitiveness of the canal, the Suez Canal Authority (SCA) recently extended fee discounts for various vessels on selected long-distance trades. The discounts, initially introduced in January, include reductions of up to 75 percent for product tankers and crude carriers on voyages between the Americas and Asia. The extended discount rates will remain in effect until the end of the year, covering 12 categories of ships such as bulk carriers, containerships, and LNG carriers. Additionally, a special discount initiative for yachts under 300 tons aims to boost marine tourism in the Red Sea region, offering a 50 percent reduction on transit fees from July to October, coinciding with the sixth edition of the Egypt International Yacht Show.

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