Egypt is studying further expansions of the Suez Canal

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.