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Effect of Political Instability on Trade in the Suez Canal

By Rana Khalifa The ongoing events in Egypt are effecting various economic sectors, as the price of petroleum rose globally. Also fears increased from the effects on the maritime movement in the Suez Canal from the events and the disturbances.

International legal experts objected to what protestors are trying to do, head to Port Tawfiq City to control the ships' movements in the Canal to shut off maritime navigation, and warned about the negative effects it would have on Egypt, politically, economically, and internationally.

Experts insist the Suez Canal is an international and global facility on Egyptian soil, and any attempt to shut it off will cause grave harm to Egypt on an economic, political, and logistical level in the short-term.

Tarek Hassanein, Director of the Suez Canal Authority , declared the maritime movement in the Canal is stable and moving, as 62 ships passed through the maritime Suez Canal waterway. Of those, 30 ships were among the northern flotilla coming from the Mediterranean Sea with a load of 1,673,000 tons. The largest number of loads came from the gas tanker "Lagamelea," with a load of 171,000 tons coming from England and heading to Emirates.

32 ships within the southern flotilla were coming from the Red Sea and heading towards the Mediterranean with a load of 1,921,000 tons. The largest number of loads was from the Panamanian cargo ship "Daniela" with a load of 159,000 tons coming from Singapore and heading to Italy.

A report from the Ministry of Planning notes that growth activity increased during the third quarter of the year 2010 as the number of ships passing through the Canal reached 4259 ships up154 ships from the same quarter from the year before.

The increase in the number of ships includes an increase in net load and revenues, with net load rising to 217.9 million tons and revenues rising to $1.2 billion dollars, up 25.2 million tons and 100 million dollars from the third quarter of 2009/2010, with a growth rate of 13% and 11% respectively. Traffic and ship loands in the Canal increased during the first nine-months of the two follow-up years, by 5%, 15%, and 10% consecutively after the Suez Canal Authority passed the global commercial and international maritime movement crisis of 2008/2009.

In general, the monthly revenue development of the Suez Canal , is better compared to the same period the year before. Monthly growth rates ranged between 6% and 18%, on an annual basis, during the nine-month period from July till March of 2011. It is notable that Canal revenues weren't affected by the events of the January 25^th Revolution as the Canal Authority continued its work and maritime movement was regular in spite of labor demonstrations in certain sectors and administrations belonging to the Authority.

The report notes that the Authority continued to implement its building and development work through investments of about 96 million Egyptian Pounds during the third quarter of 2010/2011 and about 347 million Egyptian Pounds during the first nine months of 2010/2011. The third quarter witnessed a decline in Canal investment at a rate of about 37% compared with the same quarter of the year before, while the first quarter witnessed a positive development in investment recording a rate increase of about 23%.

© Yalla Finance 2011