The Suez Canal Authority saw its revenue drop by about $2 billion year-over-year because of the traffic impact of Houthi attacks in the Red Sea, the agency said Thursday.
In FY 2023/24, the SCA's revenue fell to $7.2 billion from $9.4 billion the prior year, a drop of about 23 percent. The total tonnage passing through the canal fell by a third, and the number of transits declined by about 22 percent year-over-year.
As the Houthi attacks only began in earnest in November 2023, after half of the SCA's fiscal year had passed, the numbers partially reflect business-as-usual performance last summer and fall. Current traffic levels are less encouraging, and suggest that FY 2024/25 numbers will be even lower unless the security situation improves.
The canal is a key source of revenue for the government of Egypt, and it is one of the country's top earners of foreign currency.
While the shutdown is reducing revenue for the canal, it is a windfall for ocean carriers. The long diversion around Africa has absorbed most excess tonnage on the market, driving spot rates back up into profitable territory. The schedule changes from this detour create "bunching" at key transshipment ports, leading to port congestion as far away as Singapore. Vessel deployments have also been shuffled and reorganized on trade lanes around the globe in order to free up more tonnage for the Cape of Good Hope route, and this will have a knock-on effect in seemingly unconnected markets.
"All ships that can sail and all ships that were previously not well utilized in other parts of the world have been redeployed to try to plug holes. It has alleviated part of the problem, but far from all the problems across the industry," said Maersk CEO Vincent Clerc in an address to customers this week. "We are going to have in the coming month missing positions or ships that are sailing that are significant different size from what we normally would have on that string, which will also imply reduced ability for us to carry all the demand that there is."
For carriers, this creates a major revenue opportunity. Rates between China and the U.S. are up 500 percent year-over-year, according to Goldman Sachs, reaching levels associated with the exceptional profitability of the late pandemic years.
