Estimated $150M in losses of Suez Canal revenues caused by Red Sea skirmishes: Bloomberg economist

Cairo – January 23, 2024: 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, revealed Suez Canal Authority (SCA) Chairman Osama Rabie last week, 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.

Shipping conglomerate Maersk recently announced another set of route changes to its ME2 service that connects the western Mediterranean to the Gulf and India, redirecting cargo via the Cape of Good Hope.

Container transportation company Hapag-Lloyd announced on Monday that “according to clause 18 of our bill of lading ‘Matters affecting Performance’ we have had to take the decision to avoid the Suez Canal and the Red Sea with immediate effect, and instead route our ships around the Cape of Good Hope”.

It also shared that it is preparing to introduce land routes through Saudi Arabia to minimize the impact of disruptions to clients.