Houthi attacks on Red Sea shipping halve Suez Canal revenues

Yemeni Houthi rebels support the Palestinian movement Hamas, which has been fighting Israel since October 2023. Since December, the Houthis have regularly attacked ships in the Red Sea. During the latest attack, as a result of the bombardment of the ship "True Confidence", two people died – reports CNN.

These attacks have already impacted the financial situation of the Suez Canal, an essential trade route and Egypt's gateway to the Mediterranean Sea. According to experts, this route accounts for a third of the world's container traffic and 40% of trade between Asia and Europe.

As a result, carriers are increasingly bypassing the shortest route from Asia to Europe, passing through the Indian Ocean, the Red Sea, and the Suez Canal. Instead, they choose a roundabout route around Africa. However, this route is longer by 10-14 days and about 6,000 km.

"Suez Canal revenues have halved," said Egyptian Finance Minister Mohammed Maait, quoted by the newspaper "Kommiersant".

This is a significant blow to Egypt's budget. It is one of the main sources of income for this country, which is also struggling with the economic effects of the coronavirus pandemic, wars in Ukraine and Israel, and unrest in Libya and Sudan.

The decrease in revenues from the Suez Canal is part of wider economic problems that plague Egypt. As AFP noted, in the last fiscal year 2022/23, the country achieved a record $9.4 billion from the canal's operation, which was an improvement of 35% from the previous period.

This was made possible by the deepening of a new segment in 2014-2015, which facilitated the passing of ships. These works consumed $8.85 billion, but new revenues had to wait as they increased with yearly transit rate hikes.