[Freight Weekly] Suez Canal Revenues Fall By Half

Red Sea Crisis Results in MV Tutor Sinking

Author

Boxy
June 20, 2024

⤵️Suez Canal Authority reports revenue from transits from the Red Sea has dropped by almost half due to crisis instigated by Yemen-based Houthis⤵️

Suez Canal revenue from transits through the vital trade route at the top of the Red Sea into the Eastern Mediterranean has seen a dramatic drop. Here’s why:

  • Iranian-backed Houthi militants, based in Yemen, have instigated attacks against international shipping through the region. The militants say that they are targeting so-called “Zionist” shipping, and they support Hamas militants in their fight against Israel Defense Forces in the Gaza Strip.

  • Major shipping companies have opted to transit other routes, especially around the Cape of Good Hope, in South Africa, to avoid Houthi attacks.

  • This has led to a steep drop in transits through the Red Sea and the Suez Canal corridor, which directly impacts most trade to Western Europe from Asian ports in China, etc. Transcontinental rail freight has climbed up.

  • Revenues of the Suez Canal dropped by 64.3 percent to approximately $337.8 million, compared to $648 million recorded in May of 2023.

  • The canal authority continues to drop fees on select vessels, including merchant ships, luxury yachts, and others, as a means to bring in funds.

  • 65 countries have been impacted by the Red Sea crisis, notes a report by the U.S. Defense Intelligence Agency, which notes trade has dropped in the region to record lows. Iranian para-military groups have also been active in seizing and harassing vessels in the Red Sea, Gulf of Aden, Arabian Sea, the Gulf of Oman, and the Persian Gulf. Tensions are high.

Bottom line: The real-world implications of interrupted international shipping through the Red Sea-Suez Canal corridors and surrounding bodies of water are now visible. Rerouting vessels has added 11K nautical miles and $1 mil in fuel costs to voyages. Shippers prefer this cost increase over the Red Sea crisis.

🙅🏽Another vessel sinks in the Red Sea as tensions build in the region🙅🏽

Shipping groups, like the International Chamber of Shipping (ICS), have called on governments with regional and international “influence” to stop attacks on the vessels that are still forced to transit through the Red Sea corridor amid tensions.

  • ICS, based in London, condemned the deadly attack on the MV Tutor. The Tutor has also sunk, according to authorities, after it was attacked by an unmanned surface vessel or a drone boat. The Houthis in Yemen claimed responsibility for the attack as shipping remains threatened.

  • Tutor was a Greek-owned, Liberian-flagged bulk carrier. It was struck by the unmanned craft on June 12 while transiting the Southern Red Sea.

  • Tutor was struck a second time by an “airborne projectile.”

  • Bulk carrier MV Verbena was also attacked by two missiles. This resulted in fires and damage to the vessel. One civilian mariner was severely hurt.

  • Verbena is Ukrainian-owned, Polish-operated, and flying a Palauan flag.

  • U.S. Naval Forces in the region responded with search and rescue ops.

Bottom line: ICS is concerned, as should everyone else in shipping. Vessels remain open targets, despite not having attack capabilities or ties to Israel.

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