These considerations arise amidst a significant decline in revenue, attributed to shipping companies bypassing the Canal due to attacks by Houthi militants.
According to Reuters, the head of the Suez Canal announced on Monday that Egypt is studying further expansions of the canal to extend and finalize a second channel, potentially accommodating increased shipping volumes and preventing disruptions from impeding traffic.
Initial assessments for a potential expansion are anticipated to span about 16 months, encompassing feasibility, environmental impact, engineering evaluations, as well as soil and dredging analyses, as stated by Osama Rabie, Chairman of the Suez Canal Authority (SCA).
Funding for the project would be drawn from the SCA’s investment allocation to alleviate strain on the state’s general budget, avoiding additional financial burdens, as noted in the statement. Rabie emphasized the potential for enhancing the canal’s competitiveness and accommodating larger vessels.
These considerations arise amidst a significant decline in canal revenue, attributed to shipping companies opting to bypass the waterway due to attacks by Houthi militants in Yemen targeting vessels in the Red Sea, despite it being the shortest route between Europe and Asia.
While canal revenues have shown gradual growth, falling short of official projections, they reached a peak of $9.4 billion in the fiscal year ending in June 2023, only to plummet by at least 40% at the outset of this year due to Houthi assaults.
Any prospective expansion would build upon ongoing efforts to lengthen the second channel by 10 kilometres and to enhance a segment of the canal’s depth and width. These initiatives were accelerated following the grounding of the Ever Given, a massive container ship, in March 2021, which halted traffic for six days.
The Suez Canal serves as a vital source of foreign currency for Egypt, which invested approximately $8.2 billion in a 2015 canal expansion project, inclusive of the establishment of a parallel waterway spanning 35 kilometres.
Recent attacks by Iranian-backed Houti rebels on Maersk Line, CMA CGM, Hapag-Lloyd and Mediterranean Shipping Company (MSC)-operated containerships in the Red Sea have thwarted hopes that ‘Operation Prosperity Guardian’ – a coalition of naval ships led by the US – would make the area safer and allow transits of the Suez Canal to return to normal.
The naval protection force assembled by 10 countries to help protect ships in the Red Sea should result in Suez Canal transits returning to some sort of normality.
While reporting a new monthly revenue record for January, the Suez Canal Authority (SCA) has denied press reports that an unnamed private company has signed a 99-year concession to begin managing the Canal
The Suez Canal Authority (SCA) is to raise its transit tolls by 6% from February 2022. Only LNG carriers and cruise ships will be exempt from the increases, which Osama Rabea, chairman of the SCA, said are entirely justifiable given the positive economic forecasts and envisaged strong demand for shipping services next year.
The Egyptian government has unveiled a plan to widen the 30 km southern part of the Suez Canal, where the ever given became grounded, by 40m and to deepen it by 2m to 22m. The work is expected to take two years to complete. More capacity will also be added by extending the existing 72 km double-lane central section of the canal by 8 km.