The Suez Canal seeks to reposition itself as a safe and profitable route
- Economic challenges and regional tensions
- Change of course: repositioning the Suez Canal as a safe and profitable route
- Relevance of the canal
The Suez Canal, a vital maritime artery connecting the Mediterranean Sea with the Red Sea, has launched a 15% rebate offer for container ships of 130,000 tonnes or more. This initiative is part of a series of measures designed to encourage large shipping companies to resume traffic on this strategic route, in a context where the threat of Houthi terrorism in the Red Sea region has significantly decreased.
Economic challenges and regional tensions
The escalation of tension began in September 2023, when the Houthis, a Shiite insurgent group backed by Iran that controls north-western Yemen, launched a series of attacks on commercial ships and warships in the Red Sea. Their actions, mainly targeting vessels linked to Israel and its allies, were claimed as part of a campaign in support of the Palestinian cause. To date, attacks have been reported against dozens of commercial vessels and more than 170 US military vessels.
As a result, in 2024, the Suez Canal's revenues plummeted by 61%, falling to 3.991 billion dollars, in contrast to the record 10.25 billion recorded the previous year. This sharp decline has forced much of the maritime traffic to seek alternative routes. It is estimated that more than 90% of the container ships that regularly crossed the canal have opted to circumnavigate the African continent via the Cape of Good Hope, a considerably longer and more expensive route.
Change of course: repositioning the Suez Canal as a safe and profitable route
Following the recent ceasefire agreement between the United States and the Houthi group, and thanks to new measures implemented to restore the confidence of major shipping companies, the Suez Canal is beginning to show signs of recovery.
In recent months, the Suez Canal Authority (SCA) has intensified negotiations with major shipping companies, including giants such as CMA CGM and Maersk.
SCA Chairman Osama Rabie urged shipping companies to resume transit through the Egyptian route. At a conference at the Authority's headquarters in Ismailia, Rabie said: ‘I call on all ambassadors to convey to their shipping companies that the Red Sea is now safe. The last Houthi attack was last year. I see no reason for concern.’
According to Rabie, since February, a total of 264 ships have changed course to return to the Suez Canal instead of using the alternative route around the Cape of Good Hope. He also highlighted a ‘slight improvement’ in shipping indicators during March, with a 2.4% increase in the number of ships compared to January. ‘I see no justification for ships to take the Cape of Good Hope route, as it involves extra hours of sailing, higher crew wages, additional fuel costs and more polluting emissions,’ Rabie said. He also assured that, despite the crisis, ‘navigation through the Suez Canal has not stopped for a single day.’
To reinforce this recovery, the SCA announced a 15% discount on transit fees for container ships with a net weight of 130,000 tonnes or more, a measure that will remain in force for 90 days. This initiative seeks to ‘encourage large shipping companies’ to return to this strategic route, as these ships typically carry cargoes of between 120,000 and 200,000 tonnes.
However, the risk of the situation worsening remains. In May, the Houthis reiterated their intention to resume attacks on any vessel linked to Israel. In recent days, growing tension between Iran and Israel, coupled with US military intervention, has reignited threats from the Yemeni group, which is now also warning of possible attacks on US ships.
Relevance of the canal
Since its inauguration in 1869, the Suez Canal has been a crucial point for Western powers, providing an indispensable link between Europe and its colonies and markets in Asia and Africa.
In the 1950s, Gamal Abdel Nasser, inspired by the nationalisation of oil in Iran led by Mohammad Mossadegh, decided to nationalise the canal, which until then had been under French and British control. The response of the European powers was swift and decisive: in the midst of the Cold War, France and the United Kingdom, without informing or coordinating with the United States, secretly allied themselves with Israel to regain control of the canal through military intervention. This event marked a historic milestone, exemplifying the great geopolitical and economic importance of the infrastructure.
Today, that relevance remains, even though the international context has changed. Approximately 12% of world trade passes through the Suez Canal, representing nearly 30% of global container traffic and transporting more than 1 trillion dollars in goods per year. In terms of hydrocarbons, the canal transports around 7-10% of the world's oil, with nearly 1 million barrels of oil per day, in addition to approximately 8% of liquefied natural gas.