The ongoing crisis in the Red Sea has led to major disruptions in global shipping, forcing vessels to reroute from the Suez Canal to the Cape of Good Hope, significantly increasing costs and transit times. The crisis, exacerbated by attacks from Iran-backed Houthi militants since November 2023, has created severe economic repercussions, particularly for Egypt.

Key Developments & Economic Impact

Aspect	Details
Shipping Disruptions	Since February 2024, 47 ships have been rerouted from the Cape of Good Hope to the Suez Canal.
Red Sea Crisis	Ongoing instability has forced ships to avoid the Suez Canal, disrupting global trade routes.
Economic Loss to Egypt	Egyptian President Abdel Fattah al-Sisi reported a $7 billion loss in 2024 due to reduced canal revenue.
Suez Canal Authority’s Response	Chairman Osama Rabei noted that alternative routes remain unsustainable and expressed hope for stabilization.

Impact of the Cape of Good Hope Detour

Ships avoiding the Red Sea must take a significantly longer route around the Cape of Good Hope, impacting both distance and costs.

Route	Approximate Distance (Nautical Miles)	Additional Travel Time
Suez Canal Route (Jeddah to Rotterdam)	~1,000 NM	Standard transit time
Cape of Good Hope Detour	~10,000 NM	+12 to 14 days
Additional Distance	+7,000 NM	Increased fuel and operational costs

Key Implications

• Longer Transit Times: The rerouted path adds 12–14 extra days to shipping schedules.
• Higher Fuel Costs: Extended voyages significantly increase fuel consumption.
• Global Trade Disruptions: Supply chain delays affect industries relying on just-in-time logistics.
• Financial Strain on Egypt: The Suez Canal is a crucial revenue source, and continued disruptions could impact the national economy.

Conclusion

The Red Sea crisis remains a major threat to global shipping, increasing costs and delays for trade routes that depend on the Suez Canal. While Egyptian authorities remain optimistic about a return to normalcy, continued instability poses ongoing challenges to maritime logistics and economic stability worldwide.