55 ships have rerouted away from the Red Sea and sailed around Africa's Cape of Good Hope since the Houthi rebels hijacked the roll-on-roll-of Galaxy Leader owned by Rami Ungar's Ray Shipping on November 19. These figures were revealed yesterday by Suez Canal chairman Osama Rabie. He said that during that time 2,128 ships have sailed through the Suez Canal.
Rabie said, "We are closely monitoring the consequences of current tensions in the Red Sea and studying their impact on navigation via the canal." The Suez Canal is the gateway and northern entrance to the Red Sea along which 12% of the world's shipping cargo moves as well as 5% of crude oil, 8% of liquefied natural gas, and 10% of petroleum products. The Red Sea can only be entered from the south by the narrow Bab el-Mandeb strait between Yemen and Djibouti and the site of the Houthi attacks. 50 ships pass daily through the Suez Canal, representing 30% of the world's shipping container traffic and providing a vital source of income for Egypt.
In the 2022-2023 fiscal year, Egypt earned $9.4 billion from Suez Canal fees, up from $8 billion the previous year. As it recovered from the Covid pandemic, Suez Canal revenues helped Egypt record 6.6% economic growth in 2022. In the first half of 2023, Suez Canal revenue was worth 2% of Egypt's GDP.
The situation since the Houthis announcement last week that they were targeting all ships sailing to Israel, and the escalation in their attacks, is causing grave concern in Cairo. At the end of last week four global shipping giants: MSC, Maersk, CMA CGM, and Hapag-Lloyd announced they were halting using the Suez Canal and Red Sea route following the Houthi attacks. Hong Kong shipping company OOCL and global shipping container giant Evergreen have also suspended the route and today BP said it is halting all shipments of oil and gas through the Red Sea and Suez Canal.
A major significance of this rerouting is that 13,000 kilometers and 10-14 days will be added to sailings, making prices of goods and commodities more expensive.
Published by Globes, Israel business news - en.globes.co.il - on December 18, 2023.
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