Suez Canal Ship Traffic Plummets 66% Amid Red Sea Disruption and Middle East Tensions

Ship traffic in the Suez Canal has dropped by a staggering 66% in early April 2024 compared to the same period last year, according to new data from the Office for National Statistics (ONS). This sharp decline is attributed to increased attacks by Iran-backed Houthi rebels in the nearby Red Sea, which have forced some shipping companies to reroute their vessels around Africa's Cape of Good Hope.

The disruption in the Red Sea and its effect on the Suez Canal route serves as a powerful indication of how regional conflicts can have far-reaching consequences on global trade. Container ships along key trade routes have been repeatedly attacked since November 2023, with the Houthi rebels claiming responsibility in a show of solidarity with Palestinians in Gaza.

As a result of the attacks, the volume of maritime traffic rerouting around the Cape of Good Hope has more than doubled in the early months of 2024 compared to 2023. This longer journey extends shipping times and significantly increases operational costs for companies. The Bab-Al Mandab Strait, at the opposite end of the Red Sea, has also seen a 59% decrease in crossing volumes over the same period.

Why this matters: The Suez Canal is a vital artery for global trade, with around 12% of world trade passing through the waterway. The disruption caused by the attacks in the Red Sea threatens to hit businesses with higher supply costs and could lead to shortages of imported goods in the coming months, particularly for energy shipments.

The United States and allies have launched a joint naval operation to secure the Red Sea, but it remains unclear if this will be enough to deter the Houthi attacks. Osama Rabie, head of the Suez Canal Authority, reported a 40% drop in dollar revenues compared to the beginning of 2023, with a 30% decrease in the number of vessels passing through the canal between January 1 and January 11 compared to the previous year.

The shipping industry has learned from the post-COVID supply chain crisis and has expanded its fleet, which may help mitigate the potential impact of the rerouting. However, experts warn that the situation continues to evolve and could lead to further disruptions in global trade flows. "The attacks by Yemeni Houthi rebels on commercial vessels in the Red Sea have led many shippers to divert their routes, despite discounts and other incentives offered by the canal," said Rabie.

Key Takeaways

• Suez Canal traffic down 66% in early 2024 due to Houthi attacks in Red Sea.
• Shipping companies rerouting around Africa's Cape of Good Hope, increasing costs.
• Bab-Al Mandab Strait crossing volumes down 59% due to attacks.
• Suez Canal revenues down 40% and vessel traffic down 30% in early 2023.
• Shipping industry expanding fleet to mitigate impact, but further disruptions expected.