Suez Canal Revenue Drops Almost 25% amid Houthi Attacks

The chairman of the Suez Canal Authority (SCA) warned on Thursday that the pivotal shipping passage lost nearly 25 percent of its revenue in the 2023-2024 fiscal year, largely as a result of attacks on civilian commercial ships by Yemen’s Iran-backed Houthi terrorists.

The chairman, Osama Rabie, revealed a significant decline in ship traffic using the canal to get from the Red Sea to the Mediterranean or vice versa, a sign that many shipping companies are rerouting their vessels along the longer, more expensive route around the Cape of Good Hope in Africa. Rabie reportedly insisted in his revelations, however, that “there is no real alternative to the Suez Canal” even with the risk of Houthi bombings.

The Houthis, an Iran-backed Shiite terrorist organization responsible for a decade-old civil war in Yemen, announced they would declare war on Israel in October to show solidarity with fellow Iran proteges Hamas. Hamas staged an unprecedented slaughter of hundreds of Israeli nationals on October 7, invading the country from its stronghold in the Gaza strip and engaging in mass killings, torture, infanticide, gang-rape, and other atrocities.

Houthi leaders celebrated the killings and immediately began condemning Israel for attempting to defend itself from future attacks.

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The Houthi war on Israel has mostly taken the form of attacks on random civilian ships in the Red Sea, which Yemen has privileged access to thanks to its position on the Bab el-Mandeb strait. The Houthis have repeatedly insisted they would only target ships with ties to Israel – and, later, the United States and United Kingdom – but in reality have used drones and missiles to attack a wide variety of ships with no clear ties to any of those country. The American Defense Intelligence Agency (DIA) documented Houthi attacks on ships affiliated with 65 different countries in a recent report, including countries with friendly ties to the Houthis such as Iran, Russia, and China.

As a result, shipping insurance rates have skyrocketed and the world’s largest shipping companies have redirected much of their traffic around the Cape of Good Hope – at a tremendous loss to the Egyptian state, which manages the Suez Canal.

The Egyptian newspaper al-Ahram reported that Rabie, the SCA chief, revealed the dire economic state of the canal in a meeting on Thursday with the head of U.S. Central Command (CENTCOM), Michael Corella.

“Egypt’s revenues from the Suez Canal declined to $7.2 billion during the fiscal year (FY) 2023/2024 from $9.4 billion in FY2022/2023 due to ongoing Red Sea tensions,” Rabie reportedly explained. “Rabie said 20,148 ships carrying a net of one billion tons transited the canal during FY2023/2024, which ended on 30 June, down from 25,911 ships carrying a net of 1.5 billion tons in FY 2022/2023.”

The National, an Emirati newspaper reporting on the same meeting, also added that Rabie said “20,148 vessels, carrying 1 billion tonnes, transited the canal in the 2023-24 fiscal year, compared with 25,911 with 1.5 billion tonnes in the previous fiscal year.”

Rabie nonetheless reportedly insisted that attempts to redirect traffic have “proven there is no real alternative to the Suez Canal, as taking alternative routes has led to an increase in trip duration and operational costs.” Rabie has made similar statements in the past encouraging ships to return to the canal, most recently in June, declaring that the use of the Cape of Good Hope was “not sustainable” in the long run. At that time, al-Ahram reported that the Suez Canal had lost over 50 percent of its annual revenue as of March 2024.

Al-Ahram did not specify if Rabie asked the U.S. military to take more action to protect the trade route during the meeting on Thursday. President Joe Biden has taken minimal action to protect global shipping, focusing instead on pressuring Israel to stop attacking Hamas in Gaza. His administration’s one major action has been the Pentagon’s establishment of “Operation Prosperity Guardian” in December, an international coalition that was intended to scare Houthis out of targeting commercial ships. Following the flashy debut of “Operation Prosperity Guardian,” featuring multiple member nations who refused to identified themselves, the Pentagon has offered little information on the group’s activities. Pentagon spokesmen occasionally mention the operation but it is unclear if it has conducted any activities to stop the Houthis at all.

Since the announcement of “Operation Prosperity Guardian,” the Houthis have sunk two ships – the Belize-flagged MV Rubymar in February and the Greek-owned MV Tutor in June – and attacked over 70 vessels.

That month, exasperated by the inaction by the Biden administration and other relevant nations, the World Shipping Council joined over a dozen other international shipping organizations in demanding that state actors play a role in stopping Houthi terrorism.

“It is deplorable that innocent seafarers are being attacked while simply performing their jobs, vital jobs which keep the world warm, fed, and clothed,” the statement read. “This is an unacceptable situation, and these attacks must stop now.”

“We call for States with influence in the region to safeguard our innocent seafarers and for the swift de-escalation of the situation in the Red Sea,” the groups demanded. “We have heard the condemnation and appreciate the words of support, but we urgently seek action to stop the unlawful attacks on these vital workers and this vital industry.”

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