Houthi impacts on exports

Safeya Mounir , Thursday 18 Apr 2024

Houthi attacks on shipping in the Red Sea have been impacting Egypt’s exports.

Houthi impacts on exports


Houthi group attacks on ships navigating the Red Sea have impacted Egypt’s revenues from the Suez Canal, the world’s most important maritime route, and its exports of particularly agricultural crops, which are highly susceptible to damage during prolonged transit periods.

Ali Eissa, former head of the Agricultural Export Council, said most shipping lines have suspended the movement of containers in the Red Sea, negatively affecting Egypt’s agricultural exports.

Exports bound for India, Bangladesh, Malaysia, and Indonesia have been particularly affected, he added. Shipping companies avoid sea and land areas controlled by the Houthis, which has resulted in increased shipping costs.

Exports of oranges, onions, and potatoes have been most affected by the disruptions, Eissa stated, explaining that these crops are sensitive to transit times, and prolonged journeys may lead to damage.

Rerouting shipments via the Cape of Good Hope adds to expenses for exporters.

There have been no exports of Egyptian crops to Asian markets over the past two months, Eissa said. Exporters have been forced to explore other markets and sell their crops at lower prices in markets not initially designated as primary markets for Egyptian products.

Hani Barzi, head of the Food Export Council, said the major challenges facing exporters include a lack of available ships for fear of attacks and increased shipping costs. Rerouting to the Cape of Good Hope extends the journey by 14 days, he said.

Osama Rabie, chair of the Suez Canal Authority (SCA), said in early March that 1,433 ships had diverted to the Cape of Good Hope route as an alternative to the Suez Canal due to Houthi attacks in the Red Sea since November.

During the 13th International Conference on Maritime Transport and Logistics in Alexandria, Rabie said that 40 vessels have been attacked, including 13 container ships, a car carrier, and 26 other ships.

The Houthi attacks have resulted in increased fuel costs and longer trips around the Cape of Good Hope, leading to a rise in prices and signalling a potential global wave of inflation, Rabie noted.

Shipping lines have also imposed emergency risk fees of up to $2,500 on each container.

Mustafa Al-Naggari, a member of the Agricultural Export Council, said that markets importing crops transported via the Red Sea have been impacted. However, Egypt’s agricultural exports will not be as affected due to its diversity of markets, including in Europe.

Egyptian crops exported to the Gulf countries are shipped from the Safaga Port to the Saudi Duba Port on the Red Sea, which is 1,500 km away from areas of Houthi presence, Al-Naggari said.

Agricultural exports to Arab and East Asian countries make up 30 to 35 per cent and five per cent, respectively, of Egypt’s total agricultural exports.

Shipping costs to East Asian countries have increased due to rising insurance costs, surging from $1,000 to $7,000, which poses a considerable burden on exporters, he added.

The German Shipowners’ Association (VDR) stated last week that shipping companies are incurring an additional cost of $1 million per trip due to the diversion to the Cape of Good Hope route to avoid Houthi attacks in the Red Sea.

In March, the giant shipping company Maersk warned that Houthi attacks in the Red Sea could disrupt navigation in the area for a year.

In January, The New York Times reported that shipping companies have tripled the price of transporting containers from Asia to Europe.

Egyptian non-oil exports to the East Asian countries were affected during the fourth quarter of 2023, dropping to $374 million from $640 million and marking a 41.6 per cent decline.

* A version of this article appears in print in the 18 April, 2024 edition of Al-Ahram Weekly

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