The Suez Canal Authority has extended assurances of support to global shipping lines navigating through the Suez Canal, as tensions escalate in the Red Sea. In a recent meeting with representatives from maritime companies and agencies, Osama Rabie, Chairman of the Suez Canal Authority, emphasized the entity’s commitment to mitigating the impact of current conditions on global trade movement and the maritime transport market.
Rabie addressed the prevailing tensions in the Red Sea, citing a 40 percent decline in commercial traffic through the Suez Canal over the last two months following attacks by Yemen’s Houthi rebels. The rebels, reportedly targeting Israeli-linked commercial and military shipping in solidarity with Palestinians in Gaza, have forced some cargo carriers to opt for longer and more expensive routes to avoid potential attacks.
“The Suez Canal keeps in mind the interests of its customers and works to reduce the impact of the current conditions on the global trade movement,” stated Rabie. He outlined a comprehensive package of navigational and maritime services, including refueling, marine ambulance services, rescue and pollution control services, repair, and ship maintenance services, aimed at addressing the needs of passing ships in both normal and emergency circumstances.
Highlighting the integral role of the Suez Canal in global trade, Rabie underscored its facilitation of 12 percent of the world’s international trade volume and 25 percent of the global container trade. However, the current tensions pose challenges to global supply chains, leading to increased voyage duration, higher ship operational costs, freight loads, and insurance expenses.
These challenges, in turn, have a direct impact on international supply chains, contributing to delays and increased costs of goods for consumers. Moreover, the rerouting of vessels to alternative travel routes has raised environmental concerns due to increased fuel consumption and higher carbon emissions.
Fitch Ratings, in a report issued earlier in January, predicted that disruptions in the Red Sea could exacerbate global economic challenges by increasing manufacturers’ working capital in Europe, the Middle East, and Africa. The report highlighted potential effects on the free cash flow of industrial manufacturers, emphasizing that redirecting vessels could slow transportation of parts and finished products, necessitating additional feeder services.