Suez Canal Authority (SCA) Chairman Osama Rabie on Wednesday reaffirmed that the ongoing Red Sea crisis triggered by Houthi attacks does not provide a viable alternative to the Suez Canal. Instead, he stressed that the crisis highlights the canal’s indispensable role in ensuring global supply chain stability.
Rabie explained that shipping companies that reroute their ships via the Cape of Good Hope face significantly higher costs due to the extended journey, including increased freight and operational costs, sea charges, fuel consumption and carbon emissions.
Despite the ongoing tensions, Rabie noted encouraging signs of recovery, with some shipping lanes rerouted to the Suez Canal, according to the SCA.
Red Sea Tensions Impact Suez Canal Revenues
The escalation of attacks by Yemen’s Houthi rebels on ships bound for Israel, the US and the UK near the Bab el-Mandeb Strait has severely impacted global shipping. The Houthis claim the attacks are aimed at pressuring Israel to end its war in Gaza. As a result, several shipping companies have opted for the much longer Cape of Good Hope route instead of the Suez Canal.
The crisis has had a significant economic impact, with revenues from the canal falling by more than 60% to around $7 billion by 2024.
The Suez Canal serves as the shortest maritime link between Europe and Asia, handling around 12% of global trade. It is a major source of foreign exchange for Egypt, as well as a source of tourism and expatriate remittances. The canal is also strategically linked to the Gulf of Aden via the Bab el-Mandeb Strait.
Potential Cooperation with IMEC
Mestrallet assured that IMEC would not be a rival to the Suez Canal. Instead, he explained that the corridor, which is still under development, would have a different trade capacity combining maritime and rail transport.
He also noted that various route options were being considered, including potential cooperation with Egypt via the Suez Canal.
Egyptian Deputy Foreign Minister Naglaa Naguib, who was present at the meeting, highlighted Egypt’s extensive infrastructure development efforts over the past decade. She stressed that the country has positioned itself as a major global trade hub connecting Asia and Europe.
According to a statement from the Ministry of Foreign Affairs, Najib pointed to potential expansion opportunities between Egypt and the IMEC project, which could pave the way for future cooperation extending to the Far East, Western Europe and Africa.