Magazine article The Middle East

Suez Canal Is Raking in the Revenues: Before the US Invasion of Iraq Last Year, Egypt's Suez Canal Authority Predicted That a Fully-Fledged War in the Middle East Would Disrupt Regional Maritime Traffic, Slashing Canal Revenues by 10% or More. in Reality, Exactly the Opposite Has Happened

Magazine article The Middle East

Suez Canal Is Raking in the Revenues: Before the US Invasion of Iraq Last Year, Egypt's Suez Canal Authority Predicted That a Fully-Fledged War in the Middle East Would Disrupt Regional Maritime Traffic, Slashing Canal Revenues by 10% or More. in Reality, Exactly the Opposite Has Happened

Article excerpt

THE SUEZ CANAL IS IN THE MIDST OF booming volumes, sparked by a jump in Chinese exports to Europe and, to a much lesser extent, US military cargo bound for Iraq.

Last year, the Suez Canal generated $2.57bn in revenues--the highest in the canal's 135-year history--as 15,634 ships transited the waterway with a combined cargo of around 548 million tons, up from $1.8bn the year before.

Anil Vitharana, president of United Arab Agencies Inc. in Cranford, N.J., said Iraq-bound cargo is at a "trickle" compared to the huge volumes moving in the Asia-Europe trade.

"As far as we can see, there is very little commercial cargo moving to Iraq. Whatever moves is basically military cargo, primarily on US-flag vessels," said Vitharana, whose agency is a wholly owned subsidiary of Kuwait's United Arab Shipping Co (UASC).

"I think the Suez Canal is doing pretty well," he told The Middle East. "As ship sizes increase and volumes of East-West trade improve, the canal has to be reaping the benefits. The only other option is going around the Cape. Considering the extra transit time that would add, and the very high cost of containerships and the charter market, it wouldn't really make sense."

At present, 14% of total world trade, 26% of oil exports and 41% of the Arab world's goods and cargo pass through the Suez Canal. Average transit time is 16 hours southbound and 11 hours northbound. At least 60% of UASC's cargo transits the waterway, according to Vitharana.

That cargo consists of auto parts, furniture, wastepaper, food products, literally "almost anything" the United States imports or exports.

Adm. Ahmed Ali Fadel, chief of the Suez Canal Authority (SCA), said that much of last year's higher canal revenues are a result of increased trade prior to the fighting in Iraq.

"Exporters were rushing to deliver, and importers wanted to buy their goods before anything happened," said Fadel, speaking at a recent press conference in the Egyptian city of Ismailia, where the Suez Canal Authority is headquartered.

Fadel said the number of containerships passing through the Suez Canal jumped by 58% in 2003, while the number of breakbulk vessels rose by 20,6%. Traffic increases for 2004 will likely be much more modest, though volumes and revenues are both expected to rise once again this year.

John Fossey of London-based Drewry Shipping Consultants Ltd. said the dire predictions that war in Iraq would devastate the Suez Canal never came to pass because the canal didn't close for even a day during the recent hostilities.

"If the canal had been closed, forcing liner companies to look at routes around South Africa or through the Panama Canal, it would have been a real disaster," he said.

Fossey added that what is really driving Suez Canal revenues is the booming Chinese economy and, to a lesser extent, increasing business in India and South Asia.

"Trade with China is growing at double-digit levels and has been for some time," he told The Middle East. "A lot of that cargo is moved to northern Europe on containerships that transit the Suez Canal. The ships have gotten bigger, they're sailing full, therefore the revenue the canal is getting is on the increase."

Since its inauguration on 17 November 1869, over a million ships have passed through the Suez Canal, with a net cargo exceeding 12bn tons. In 1956, the famous waterway was nationalised by the Nasser regime--sparking a war involving Egypt, Israel, France and Great Britain. The canal was once again closed to international shipping in 1967 as a result of the Six-Day War. Cleared of mines and wreckage, it was reopened in 1975 and enlarged in 1980.

Since its nationalisation, the Suez Canal has generated $30. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.