Shipping firms decision to reroute away from Suez Canal is 'temporary' amid Red Sea tensions: SCA chair

Ahram Online , Zeinab El-Gundy , Tuesday 16 Jan 2024

Osama Rabie, the chairman of Egypt’s Suez Canal Authority (SCA), has stressed that the decision of some shipping companies to reroute from the Suez Canal is a temporary measure driven by security concerns amid the ongoing escalation in the Red Sea.

A cargo ship sails through the town of Ismailia, Egypt. AP
A cargo ship sails through the town of Ismailia, Egypt. AP


Seven of the biggest shipping companies – including CMA-CGM, Hapag-Llyod and Maersk – have suspended all journeys through the Red Sea after Houthi attacks on Israel-linked shipping near crossing the Bab al-Mandab strait at the bottom of the sea and the US-UK counterstrikes.

Rabie said that even though only 19 ships were targeted since the beginning of the Red Sea escalation, the tension has had a “significant” impact, as shipping companies are alarmed. 

Dollar revenues from the Suez Canal declined by 40 percent during the first two weeks of January, compared to the same period last year, Rabie said in a TV comment on Tuesday evening, adding that the number of passing ships declined by 30 percent.

The number of ships that were supposed to cross the canal – but did not – since 19 November 2023 has reached 3,562 vessels, according to the SCA chairman.

Some companies have chosen to suspend their trips only until these attacks cease, said Rabie.

All shippers that have halted transit through the Suez Canal said they did so “temporarily or until further notice,” he added, assuring “it is not a permanent diversion.”

Meanwhile, the SCA chairman asserted that the impact is not only on the Suez Canal but on the entire world,

Rabie emphasized that the Suez Canal is the safest and most cost-effective compared to Africa’s Cape of Good Hope route.

Heading down around the Cape of Good Hope route and then back north to Europe forces ships to take a longer time, up to 15 days, resulting in increased fuel consumption and wages paid to workers, he clarified.

The Cape route is also not safe for small ships in winter, he added.

The canal is a major source of hard currency for Egypt.

The Red Sea is linked to the Mediterranean by the Egyptian Suez Canal, creating the shortest shipping route between Europe and Asia.

It is also connected to the Gulf of Aden by the Bab Al-Mandab strait between Yemen and Djibouti.

Houthi attacks, which come in solidarity with Palestinians amid Israel’s more than three-month-long war on the Gaza Strip, have prompted global concerns that a wider regional conflict that would disrupt global commerce is looming.

Egypt expressed concerns over the US-UK counterstrikes, warning that the move would lead to more escalation.


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