Officials from Egypt and major shipping lines met for discussions regarding a return of global shipping to the beleaguered Suez Canal trade route.
Ossama Rabiee, chairman of Egypt’s Suez Canal Authority, last week met with representatives of 20 shipping lines and agencies to discuss developments in the Red Sea and their impact on global trade transiting through the Canal and the maritime transport market.
The summit at authority headquarters, which was also attended by several members of the agency’s board of directors, was the latest in a series of periodic meetings held by the agency to consult on sailing plans and schedules.
The meeting came as Egypt looks to recover from severe double-digit declines in toll revenues since late 2023 after attacks on merchant shipping by Houthi militia based in Yemen. The violence forced the largest cargo lines to divert services away from the Suez route and on longer, more expensive voyages connecting Asia with ports in Europe, the Mediterranean and the United States.
Toll revenues plunged as much as 60% in 2024 to $4.2-$4.25 billion in 2024 after a record $10.25 billion in 2023. Revenue improved in the first quarter of this year to $899 million, a gain of more than 16% from the year-ago period.
There have been concerns that cratering toll revenue could force the Egyptian government to cut spending, an unsettling prospect given the recent upheavals in Syria, Iran, Gaza, Lebanon and elsewhere in the region. The SCA in May of this year began offering a 15% discount on tolls for large container ships in an effort to woo back major carriers.
While ocean lines in 2024 saw an initial windfall of billions of dollars to their bottom lines from the diverted voyages, the recent shakeup in world trade and on-again off-again tariffs by the United States has weakened demand amid an uncertain outlook and hit carrier profits.
At the same time, Suez Canal traffic has improved. Vessel transits from July to October totaled 4,405 vessels of a total 185 million tons, compared to 4,332 vessels and 167.6 million tons year-on-year.
Rabiee in a release credited the October Gaza ceasefire talks for helping to calm tensions. October saw the return of 229 vessels to the Canal, the highest monthly rate of return since the beginning of the crisis.
The waterway on Nov. 7 hosted CMA CGM’s 17,859-TEU Benjamin Franklin — the largest such vessel to navigate the passage in two years. The CMA CGM Zheng He, of similar size, also made a recent transit. The French company has been one of the few global carriers to maintain scheduled services through the Red Sea during hostilities.
At the summit Tariq Zaghloul, chief executive of CMA CGM’s Egypt business, said that there is no alternative to the Suez Canal, and anticipated an increase in the group’s voyages in the coming quarter, in light of the company’s expansion plans and anticipated increased volume through the construction of new vessels.
Rabiee urged shipping agencies to reassure carriers and encourage them to resume transiting the Suez Canal.
Ehab El-Bannan, chairman of British shipbroker Clarkson, at the summit said the authority should consider offering incentives linked to the number and tonnage of vessels to boost transits. He expects a “significant breakthrough” in Canal traffic in the New Year, “God willing”.
Robert Uggla, chairman of A.P. Moller-Maersk (MAERSK-B.CO), parent of the world’s second-largest shipping line, in October met with Egyptian President Abdel Fattah El-Sisi to reaffirm the company’s investment in that country.
Mediterranean Shipping Co., the world’s largest container carrier, told the summit that it anticipated a swift return of southbound vessels, given the improved stability in the region. Taiwan’s Evergreen (2603.TW) said it is ready to resume transits as soon as the situation in the region stabilizes “completely and permanently”.
Cosco representative Hani Al-Salami said structural changes in the international maritime community — including falling rates and a shift in supply and demand — will spur the return of lines to the Suez Canal.
Find more articles by Stuart Chirls here.
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