Plans to end the war in Gaza could help restore global shipping traffic through the Suez Canal in 2025, according to Osama Rabie, chairman of the Suez Canal Authority.
The key maritime route, used by container ships and tankers connecting Asia with Europe, the Mediterranean, and the United States, saw traffic drop by as much as 60% in recent months. The decline followed a resurgence of attacks on merchant shipping in the Gulf of Aden and Red Sea by Yemen-based Houthi rebels.
In early 2024, major carriers rerouted their vessels around the Cape of Good Hope, adding up to two weeks to some voyages. The disruptions caused canal toll revenues to crash by more than 60%, or an estimated $6-$7 billion, following a record $10.25 billion in 2023.
“Shipping lines and insurers deemed the Red Sea route too unstable after repeated attacks,” Rabie said, noting that the instability forced a global restructuring of shipping routes. While the changes boosted liner operators’ profits, they created ripple effects across ports, terminals, and the global supply chain.
Rabie expressed cautious optimism that a gradual normalization could begin this year, following indirect talks in Egypt between Hamas and Israel aimed at ending the two-year Gaza conflict. A ceasefire agreement and a statement from the Houthis indicating they would no longer target Western ships could accelerate the recovery.
Despite these hopes, risks remain. On October 2, a Houthi-launched cruise missile struck a Dutch cargo vessel, killing one crew member and injuring another. Average daily ship transits through the canal have fallen to 32, compared with 75 before the conflict. Supertankers are reportedly avoiding the waterway entirely.
The slowdown has had a major impact on Egypt, where canal tolls account for 15% of foreign currency income and 10% of GDP. While the government recently posted a budget surplus largely from other sources, reduced canal revenues continue to cause concern amid regional instability in Syria and Iran.
Adding another variable to global shipping, China recently successfully tested a trans-Arctic route that could reduce voyage times by up to 18 days, offering a potential alternative for time-sensitive shipments.
