Suez Canal: drop in revenue puts 2025 goal at risk by $13 billion

(Ecofin Group) – Since the beginning of the Houthi attacks, the Cape of Good Hope, despite the longer route, has become an alternative to the Suez Canal whose income is constantly increasing down.

Egypt seems to be moving further and further away from the target of $13 billion in revenue planned for the operation of the Suez Canal by 2025, due to the significant drop in revenue -in since the start of the armed conflict in the Gulf of Aden. As of January 2024, the loss of the Canal is estimated to be close to 6 billion USD, or about 50 to 60% of its income according to President Abdel Fattah Al-Sissi, announced by the local media.

For this financial year, the Suez Canal Authority (SCA) expected $9 billion in revenue, after marking a drop of 23.4% at the end of the 2023/2024 financial year, ending on June 30. 20,148 vessels were registered over this period, compared to 25,911 for the 2022/2023 financial year.

Abdel Fattah Al-Sissi’s statements come amid rising tensions in the Gulf of Aden in recent weeks, despite efforts by a US-led naval coalition to counter attacks on ships . According to the head of state of Egypt, the situation increases the ban on the revenue goals of this strategic sea route, as well as the national economy in general.

“The current developments are very worrying and could lead to an increase in conflict in the region, putting stability and the economy at risk.”

The situation also maintains supply constraints on Africa’s supply chain. Since the crisis began, several international shipping companies have decided to reroute their ships to avoid traveling through the Suez Canal, thus extending their journeys by more than 10 days.