In May 2024, Egypt’s Suez Canal revenue dropped sharply to $3,378 billion, down by half from $6,48 billion in the same month in 2023. This phenomenon has caused widespread concern in the global shipping industry and the economy. Analysis suggests that the main reason for Suez Canal revenue decline is the ongoing attacks by Yemen’s Ansar Alaa (the Houthi Armed Forces), against ships linked to Israel, the United States or the United Kingdom.

The Houthi armed forces have launched multiple attacks on ships crossing the Red Sea and the Arab Sea since November last year, with the support of Iran. Recently, on June 8, the Houthi armed forces attacked two merchant ships off the coast of Aden, aggravating the uncertainty of regional shipping. These attacks directly impacted shipping activities through the Suez Canal, causing ships to evade this important passageway, switch to other routes, or simply delay their shipping plans.

The Houthi armed forces claim that these operations will continue until Israel ends its attacks on the Gaza Strip. This statement shows that the impact of the regional conflict is not limited to land but also extends to maritime trade lines, seriously interfering with the normal operation of international shipping.

In response to the challenge of falling revenue, the Suez Canal Administration decided to extend a series of incentives until the end of 2024, including reducing the transit fees for ships and tankers by 15 to 75 percent.

Egypt is currently facing a continuing financial crisis, which will be central to the BRICS meeting of foreign ministers. The meeting will be held in the Russian industrial city of Novgorod from 10 to 11 June, with Egyptian Foreign Minister Shukri attending the meeting and delivering two speeches. The first speech will discuss BRICS cooperation and international and regional issues, and the second will focus on how to cooperate with partner countries.

As a new member of the BRICS, Egypt hopes to seek economic support and development opportunities by strengthening its cooperation with the BRICS countries. Shukri will hold a series of bilateral meetings with foreign ministers during the meeting to discuss strengthening bilateral relations and economic and financial cooperation, and exchange views and evaluations on the Gaza war issue.

The Suez Canal, an important navigation route connecting the Mediterranean and the Red Sea, carries about 10% of the world’s maritime trade volume. The sharp drop in revenue has not only had a direct impact on the Egyptian economy, but also a minor impact on the global shipping market. Ships avoiding the Suez Canal or choosing other routes will increase shipping time and costs, and adversely affect the stability of the global supply chain.

Moreover, shipping companies have had to increase security measures and insurance costs in the face of regional conflicts and security threats, which further boosts operating costs.For global trade that relies on shipping, these additional costs could eventually be transferred to consumers, leading to higher commodity prices.