Egypt's Suez Canal revenue fell 23% in last fiscal year due to Houthi attacks

Vital waterway handled 500 million fewer tonnes of cargo in 12 months ending June 30

Shipping containers pass through the Suez Canal in Egypt. Reuters

Egypt's Suez Canal reported a 23 per cent drop in annual revenue for the fiscal year 2023-24, mainly due to the impact of attacks by Yemen's Houthis on ships in the Red Sea.

Total revenue for the 12 months ending on June 30 was $7.2 billion, a decline from $9.4 billion during the same period in the previous year, the Suez Canal Authority said on Thursday.

The number of ships also fell during the period: 20,148 vessels, carrying 1 billion tonnes, transited the canal in the 2023-24 fiscal year, compared with 25,911 with 1.5 billion tonnes in the previous fiscal year.

The waterway remains a vital pillar for the stability and sustainability of global supply chains, Osama Rabie, head of the Suez Canal Authority, said during a meeting in Cairo with the US Central Command chief General Michael Kurilla on Thursday.

He stressed that the current tensions in the Red Sea not only affect the Suez Canal but also the maritime transport market, global trade and international supply chains.

The Houthis, aligned with Iran, have been targeting ships in the Red Sea as part of their campaign to support their ally, Hamas, in its war with Israel in Gaza.

The rebels have targeted more than 70 vessels with missiles and drones since they began their attacks in November, which have so far killed four sailors, according to a report by the Associated Press.

The Houthis have also seized one ship and sunk two since November, according to the Joint Maritime Information Centre (JMIC), recently established by a US-led multinational naval coalition formed to secure the Red Sea, Bab Al Mandeb and Gulf of Aden.

The attacks have escalated in recent months, with the Houthis claiming responsibility for targeting a Panama-flagged, Israeli-owned vessel and a Liberian-flagged, Marshall Islands-owned oil tanker on Monday, JMIC said.

Mr Rabie said security challenges in the Red Sea have driven many ship owners and operators to seek alternative routes, negatively affecting transit rates through the canal.

Taking other routes has led to increased voyage durations, higher operational costs and harmful environmental effects due to increased carbon emissions, as well as port congestion and delayed arrival of goods, he added.

This week, AP Moller-Maersk said the "cascading impact of these disruptions extends beyond the primary affected routes, causing congestion at alternative routes and trans-shipment hubs essential for trade with Far East Asia, West Central Asia and Europe".

Maersk and other shipping companies have been diverting vessels round Africa's Cape of Good Hope since December to avoid the Red Sea, with the longer voyage times pushing freight rates higher.

The Suez Canal, connecting the Mediterranean to the Red Sea, is a vital artery for global trade and a critical component of Egypt's economy.

The 190km waterway enables the passage of about 12 per cent of the world's seaborne trade, including oil, natural gas and other essential commodities.

For Egypt, which continues to contend with a severe economic crisis, the Suez Canal is a major source of foreign currency income that generates billions of dollars in annual revenue and supports numerous jobs in the country's maritime and logistics sectors.

Despite the challenges, Mr Rabie said the Suez Canal Authority continues to mitigate the impact of the current situation by communicating with clients and through the introduction of new navigational services.

The authority also highlighted its maritime safety and security system for ships transiting the canal, with Mr Rabie promising that the Egyptian Armed Forces are being deployed to secure vessels.