It is reported that the slump in global trade is having a more severe impact than was expected on traffic through the Suez Canal, a crucial source of income for the Egyptian government. Despite the Suez Canal Authority efforts to encourage traffic through the canal, by temporarily freezing its tolls in early January, revenues for the first month of the year were 65% down on August 2008. While container ships and dry bulk cargoes account for most of this decline, government figures show that the amount of oil transported through the canal in January reached its lowest level since June 2003.
Mr Ahmad El Manakhly vice director of Planning & Research at Suez Canal Authority said that "The main decline in Suez traffic is because of container trade and dry bulk trade, especially for coal and iron ore. These raw materials are used for the production of steel, which has been badly affected by the global economic crisis. This situation is very bad."
According to the Suez Canal Authority reflecting the potentially serious impact the economic crisis will have on Egypt’s economy, total government receipts for the Suez Canal dropped from a record monthly high of USD 504.5 million in August to just USD 332.4 million in January. In fiscal year 2007-08, Suez Canal revenues accounted for 3.2% of GDP, while tourism, another important source of foreign income, accounted for 6.6% of GDP. The decrease in traffic through the canal began in earnest in November last year 1,770 ships transited the canal that month, compared with more than 1,900 in August and October, while the number fell to 1,560 in December, and just 1,313 in January.
On top of the contraction in global seaborne trade, the sharp rise in piracy attacks off the coast of Somalia last year also appears to have reduced traffic through the canal, prompting some major shipping firms to re-route some or all of their vessels via the Cape of Good Hope. But the SCA insists that piracy has very little to do with the fall in traffic and is currently carrying out a study, in consultation with shipping and container companies, about how it can encourage them to use the canal.
Mr Ahmad El Manakhly vice director of Planning & Research at Suez Canal Authority said that "The main decline in Suez traffic is because of container trade and dry bulk trade, especially for coal and iron ore. These raw materials are used for the production of steel, which has been badly affected by the global economic crisis. This situation is very bad."
According to the Suez Canal Authority reflecting the potentially serious impact the economic crisis will have on Egypt’s economy, total government receipts for the Suez Canal dropped from a record monthly high of USD 504.5 million in August to just USD 332.4 million in January. In fiscal year 2007-08, Suez Canal revenues accounted for 3.2% of GDP, while tourism, another important source of foreign income, accounted for 6.6% of GDP. The decrease in traffic through the canal began in earnest in November last year 1,770 ships transited the canal that month, compared with more than 1,900 in August and October, while the number fell to 1,560 in December, and just 1,313 in January.
On top of the contraction in global seaborne trade, the sharp rise in piracy attacks off the coast of Somalia last year also appears to have reduced traffic through the canal, prompting some major shipping firms to re-route some or all of their vessels via the Cape of Good Hope. But the SCA insists that piracy has very little to do with the fall in traffic and is currently carrying out a study, in consultation with shipping and container companies, about how it can encourage them to use the canal.