Despite coronavirus, Suez Canal information excessive revenues

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Feb 11, 2021

CAIRO — Despite the destructive results and repercussions of the outbreak of the coronavirus on international commerce, the Suez Canal recorded revenues of $5.61 billion in 2020 — the third-largest whole within the historical past of the canal. 

The canal recorded its highest revenues in 2019 with $5.eight billion, and its second-highest in 2018 with $5.7 billion. This raised questions as to how the canal achieved these revenues amid the troublesome circumstances and whether or not or not it will likely be capable of improve such revenues in 2021.

Suez Canal Authority Chairman Osama Rabie mentioned final month that the canal had $5.61 billion in income in 2020 regardless of the troublesome circumstances attributable to the coronavirus pandemic.

He mentioned 18,829 ships handed by means of the canal throughout this identical yr with a complete web weight of nearly 1.17 billion tons, thus reaching the second-highest tonnage within the historical past of the canal after 2019. That yr witnessed 18,880 ships with a complete web weight of nearly 1.21 billion tons go by means of the canal. The distinction between the years was 51 ships and 38.1 million tons.

The Suez Canal is the quickest navigation route connecting Asia to Europe. It is 193 kilometers (120 miles) lengthy and is likely one of the important sources of overseas foreign money for the Egyptian economic system.

Several specialists and observers informed Al-Monitor that the entire income for 2020 is successful for the Suez Canal Authority and the advertising and marketing plans it put in place to counter the destructive results of the coronavirus. These specialists anticipate a rise in revenues this yr.

Suez Canal Authority spokesman George Safwat informed Al-Monitor that final yr’s revenues have been the results of onerous work and planning.

Safwat mentioned that after oil costs began dropping in early January 2020, the authority began to contact world delivery strains to strive to determine what this may imply by way of the maritime motion of products. The authority’s financial unit was tasked with gauging the state of affairs and creating a basic notion of all situations and easy methods to deal with them. He mentioned that by the top of the month, the canal had drawn up plans to cope with the destructive results of the coronavirus.

Safwat mentioned the canal authority contacted delivery strains everywhere in the world to make presents that included reductions in transit charges for every type of ships — be they transporters of automobiles, items, containers, dry bulk or even vacationers — with the intention to present incentives and encourage them to go by means of the canal. He mentioned these incentives have been warmly welcomed by numerous delivery strains.

He mentioned the authority positioned emphasis on “green marketing,” as giant charge reductions have been supplied to ships fueled by pure fuel to scale back dangerous emissions to the environment. This step, he added, lured delivery corporations that assist this development as the largest pure gas-powered ships handed by means of the canal, serving to improve the variety of canal patrons and positively affecting revenues.

“Also, we targeted distant markets that do not [usually] deal with the Suez Canal, such as the eastern coast of the US, Australia and South America, and we provided them with significant reductions in traffic fees, which increased the number of ships passing through the canal to 18,829 ships, of which about 4,087 came from the new markets with revenues of $930 million, accounting for about 16% of the total revenues achieved in 2020,” he mentioned.

He mentioned the Suez Canal Authority’s digital transformation additionally offered incentives to many delivery strains to travel by means of the canal, as an digital platform was established for making reservations and paying visitors charges; this allowed many ships coming from lengthy distances to obviously see what their prices and financial savings may very well be.

He additionally mentioned, “We will work on increasing the canal’s revenues this year, which are determined by the global trade movement in the wake of vaccines aimed at stopping the spread of the coronavirus in the world, and we have plans to deal with all scenarios to preserve and increase the canal’s historical revenues by providing further incentives.”

Some say the canal might have achieved extra.

While Rashad Abdo, the pinnacle of the Egyptian Center for Economic and Strategic Studies, praised how the Suez Canal Authority saved revenues up in 2020 regardless of the pandemic, he mentioned the canal might have achieved even higher. He mentioned the authority’s failure to make use of worldwide corporations that specialize in advertising and marketing and promotion doubtless meant that Egypt missed out on a possibility to extend the variety of ships passing by means of the canal and a subsequent enhance in revenues.

Abdo mentioned better world financial exercise in 2021 amid a rise in oil costs will considerably contribute to a rise within the canal’s revenues this yr.

Ahmed al-Shami, an adviser on maritime transportation on the Transport Ministry, additionally expects Suez Canal revenues to extend this yr in gentle of the rise in international commerce this yr, due partly to the rollout of vaccines for the coronavirus.

Shami informed Al-Monitor {that a} good market evaluation and the eventual improve in international commerce and oil costs final yr contributed to the event of promotional advertising and marketing plans that contributed to Egypt’s efforts to get as many ships go by means of the canal as attainable.

He mentioned the incentives and worth reductions supplied by the Suez Canal usually are not solely geared toward preserving its present prospects however at luring new prospects and reaching greater revenues, and that every one this in flip would pump extra overseas foreign money into the Egyptian economic system.