SCA Chief: Situation in Red Sea may exacerbate CO2 emissions

CAIRO – 25 January 2024: In his meeting with Secretary-General of the International Maritime Organization (IMO) Arsenio Dominguez on Thursday via video conference, Chairman of the Suez Canal Authority (SCA) Admiral Ossama Rabie said that the current situation in the Red Sea region may exacerbate the harmful carbon emissions of vessels as they consume larger amounts of fuel when they take alternative routes.

Both sides tackled the developments in the current situation in the Red Sea and Bab al-Mandeb region, and discussed mechanisms of cooperation and joint action to reduce the effects of the crisis on global supply chains and maritime freight traffic, said the SCA in a statement.

Admiral Rabie added that the Suez Canal achieves savings in time and distance compared to alternative routes, and this contributes to reducing fuel consumption by rates ranging from 10 to 90 percent, consequently reducing harmful carbon emissions. He noted that that the Suez Canal contributed to reducing carbon emissions by 55.4 million tons during 2023, by saving 16.9 million in fuel consumption .

The SCA Chairman also stressed that navigation in the canal is regular and has not stopped for a single day since the outbreak of the crisis, as part of the SCA’s continued efforts to support its clients to mitigate the impact of the current situation.

Additionally, Admiral Rabie reviewed the package of navigational and maritime services provided by SCA, which includes, in addition to pilotage services, Bunkering services, ship repair and maintenance services at SCA shipyards, marine ambulance services, marine salvage services, pollution control, and other services that the Canal-transiting vessels may need in normal and emergency circumstances.

He pointed out in this regard that the Suez Shipyard Company, affiliated to SCA, carried out maintenance and repair works of the dry bulk carrier “ZOGRAFIA” after it was attacked in the Red Sea.

The meeting is the first since the secretary-general of the International Maritime Organization took office at the beginning of 2024. It comes as “a continuation of the SCA’s efforts to communicate with all active parties in the international maritime community,” the statement added.

In the meeting, Admiral Ossama Rabie congratulated Dominguez on assuming his new position as secretary-general of the International Maritime Organization, wishing him success in dealing with the critical challenges facing the maritime transport market. He expressed his aspiration for a continued cooperation and joint coordination with the IMO and the resulting initiatives that work for the interest of the international maritime community, especially initiatives aimed at preserving the environment and reducing harmful carbon emissions of vessels.

For his part, Arsenio Dominguez affirmed his keenness to strengthen joint cooperation with the Suez Canal Authority, and underscored his appreciation of the efforts made by the authority in establishing effective communication with all concerned parties of the maritime transport market which is deemed as an essential approach to identify the needs of the ship owners and operators to ensure a safe passage through the Suez Canal.

The IMO secretary-general explained that the current situation in the Red Sea region imposes many challenges on the global trade movement, the maritime transport market, the Suez Canal, and the ports in the region.

Dominguez stressed that the IMO supports freedom of navigation and calls for calm in the Red Sea region. The IMO is working to provide full support for the Suez Canal by sending a clear message to all its members that navigation in the canal is still open to everyone, especially in light of the logistical and security challenges faced by the vessels that go around the Cape of Good Hope. The cape route is deemed unsustainable for navigation traffic as it lacks essential services.

Red Sea tensions and disruptions caused by Yemen’s Houthi attacks, which have led shipping companies to divert cargo from Egypt’s Suez Canal, cost the country around $150 million in canal revenues, according to Bloomberg’s Chief Emerging Markets Economist Ziad Daoud.

However, the economist emphasized that the $150 million loss is negligible when compared to Egypt’s annual $400 billion revenue and the Suez Canal’s reported revenues of $8.8 billion for FY2022/2023.

Posting on his personal X account, Daoud shared a data set released by PortWatch, the International Monetary Fund’s (IMF) platform monitoring disruptions in maritime trade flows, which indicated a steep fall in the canal’s 7-day moving average for December. He added that trade volume through the Suez Canal fell close to 44 percent year-on-year.

Traffic through the Suez Canal has dropped by 30 percent since the start of 2024, Suez Canal Authority (SCA) Chairman Osama Rabie previously revealed, leading to a 40 percent decline in FX revenues between January 1-11.

Shipping companies continue to select alternative routes to their destinations as Houthi attacks target Israel-linked vessels near the strategic Bab Al-Mandeb Strait in the Red Sea. In response, the US, the UK, and Australia, in cooperation with Bahrain, have hit several sites in Yemen.