The Suez Canal has seen a significant decline in dollar revenues, with a 40% drop from the beginning of the year compared to 2023. This decline is attributed to attacks on ships by Yemen’s Houthis, leading major shippers to divert away from the route. Ship traffic was down 30% in the period between January 1 and January 11 compared to the previous year, with the number of vessels passing through the canal dropping to 544 so far this year from 777 in the equivalent period of 2023.
The Suez Canal is a key source of scarce foreign currency for Egypt, and authorities have been making efforts to boost revenues in recent years, including through the 2015 expansion of the canal. However, Yemen’s Iran-aligned Houthis have been targeting commercial vessels in the Red Sea in support of Hamas’ fight against Israel, leading many commercial shippers to divert vessels to other routes. The United States has announced a new international mission to patrol the Red Sea and deter attacks.
Canal authority head Osama Rabie stated that the security concern to shippers could not be overcome with discounts or other incentives offered by the canal and emphasized that a large portion of goods will return to the canal once the situation stabilizes.