Mikkel Rosenvold
9 weeks ago

Suez Canal still closed

Higher prices coming to Europe soon?
The Suez Canal is a shipping canal in Egypt.
Dipix / Shutterstock.com

For the first time in over two months, no liquefied natural gas (LNG) carriers have navigated through the Suez Canal, as highlighted by recent United Nations Conference on Trade and Development (UNCTAD) data, according to Splash247.com.

The last LNG shipment traversed the critical Egyptian passage on January 16, with a worsening security situation in the Red Sea prompting the redirection of these vessels around Africa. This trend has made LNG carriers uniquely absent from the Suez Canal in recent times, significantly impacting overall trade volumes.

According to the International Monetary Fund, trade through the canal has seen a 50% decline in the first two months of 2024 compared to the previous year, while routes via the Cape of Good Hope experienced a 74% increase.

This shift has severe financial implications for Egypt, with revenue from Suez Canal transits, which amounted to $10.25 billion last year, potentially halving to about $5 billion this year. Clarksons Research further reports a 72% decrease in vessel arrivals in the Gulf of Aden for all merchant ship types since the first half of December.

The Suez route was largely abandoned by international shipping companies following the Gaza War, which prompted the Houthi militia in Yemen to attack international shipping in the Red Sea.

International shipping has since become accustomed to sailing south of Africa - a much longer, but obviously much safer route.

This has yet to make its mark on consumer prices in the West, but there is little doubt that the increased length and thus cost of transporting goods from especially Asia to Europe will have an impact on prices on the shelf in a few months time.

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