The Suez Canal, a vital artery for global maritime trade, has suffered a dramatic decline in revenue, plunging by 60% in 2024. This translates to a staggering $7 billion loss for Egypt, a nation heavily reliant on the canal for foreign currency earnings. The crisis underscores the profound impact of geopolitical instability on international trade and regional economies.

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Geopolitical Factors Behind the Decline

1. Disruptions in the Red Sea
   Since late 2023, Houthi fighters in Yemen have launched attacks on merchant and naval vessels in the Red Sea, just south of the canal. These assaults have forced major container ship operators to reroute their vessels away from the region, opting for the longer and costlier journey around the Horn of Africa.
2. Global Trade Impact
   • The diversions have caused shipping rates to surge, inadvertently boosting carriers’ profits.
   • By November, an ultra-large container ship (ULCS) with a capacity of 18,000+ TEUs had not transited the canal for 40 weeks, according to Alphaliner.
3. Military and Political Unrest
   A multinational force of American and European military personnel has been deployed to patrol the region, offering escort services to merchant vessels. Meanwhile, the Iran-backed Houthis have shifted their focus towards Israel, citing solidarity with Palestinians amid the Israel-Hamas conflict.
4. Broader Regional Instability
   • The fall of the Assad regime in Syria and Russia’s withdrawal from Syrian ports have added layers of uncertainty to an already volatile Middle East.
   • President Abdel Fattah al-Sisi attributes the revenue loss to rising geopolitical challenges but has not elaborated further.

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Economic and Strategic Ramifications

1. Egypt’s Economic Strain
   In 2023, the Suez Canal generated $9.4 billion, constituting 15% of Egypt’s foreign currency inflows. The current shortfall exacerbates the nation’s economic woes.
2. Shippers’ Profits vs. Regional Losses
   While shipping companies have capitalized on higher rates, the increased costs and logistical challenges weigh heavily on global trade efficiency.
3. Projected Recovery
   Experts predict a gradual return of Red Sea shipping services as security improves, but a full recovery is unlikely before the second half of 2025.

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Data Table Summary

Key Area	Details
Revenue Loss	60% decline, $7 billion shortfall in 2024.
2023 Revenue	$9.4 billion, 15% of Egypt’s foreign currency inflows.
Disruptions	Houthi attacks on vessels in the Red Sea; diversions around the Horn of Africa.
Impact on Shipping Rates	Rates have surged, boosting carrier profits.
ULCS Transit Gap	40 weeks without an 18,000+ TEU ULCS transiting the canal.
Military Intervention	American and European forces escorting vessels in the Red Sea.
Projected Recovery	Expected improvement in security by the second half of 2025.

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Conclusion

The dramatic drop in Suez Canal revenue illustrates the vulnerability of critical trade routes to geopolitical tensions. While some optimism exists for a recovery by 2025, the current crisis serves as a stark reminder of the intricate connections between regional stability, international trade, and global economic health.