Slowdown and Piracy Sink Suez Canal Revenues

Suez Canal, Egypt’s major foreign currency earner and world's busiest international trade routes has slashed its revenue by 7.2 percent owing to decline in traffic triggered by global economic crisis and piracy scare re-routing. The 191km long man-made waterway allows vessels to bypass without travelling around Africa to reach destinations across the continent.

The Suez Canal Authority Chairman Ahmed Fadel announced at a press conference Canal’s revenue in the 2008-09 fiscal year which ended on June 30, crimped to $4.74bn from its all-time high of $5.1bn of the previous year. However, Fadel claimed it was the downturn that had resulted in lower revenues rather than the piracy as piracy remained a bane to many other parts of the world.

Fadel also indicated that the impact on shipping from piracy in the Gulf of Aden off the Horn of Africa had been exaggerated. The pirate attacks in the Gulf of Aden, a key route to the canal, had scared off many ship owners to divert their vessels through the old route of Cape of Good Hope.

The Canal’s revenue loss is cited has the major reason for the slower 4.7 GDP growth of Egypt as compared to 7 percent of the past three years. This fiscal, 19,354 ships passed through the waterway which connects the Indian Ocean and the Mediterranean Sea with regards to 21,080 in 2007-08. About 811.4mn tons of goods passed the canal during the same period, down 8.9 percent from 890mn tons of the previous year.

Fadel stated that the government had taken number of steps to attract higher traffic including keeping the toll unchanged and infrastructural improvements to accommodate all kinds of ships. The authority had almost completed work on dredging and deepening of the Canal which when finished would allow to handle ships over 240,000 tons, up from the current 200,000 ton limit. Besides, the deepening of the Canal from 62 feet to 66 feet is expected to pave way for 64 percent of the world's oil tanks and 99 percent of the cargo ships to transit through the water way by this year end.

By Jose Roy