“No one is more a canalist than I, but I want the Canal to belong to Egypt, not Egypt to the Canal”-Isma’il Pasha, Khedive of Egypt
The Suez Canal, since its establishment in 1869, has remained to be an important artery for world trade crisscrossing from the East and West. It has great impact on the global economy considering that it provides waterway for transporting petroleum commodities from the producers to the consumer states. Added to that, from a defence and strategy perspective, the canal has been used as “a gateway for military convoys” from the Mediterranean to the Red Sea. According to some pundits, it is the strategic opening to the Middle East provided by the canal that has allowed for great powers to instigate rivalry and conflict in the region.
Suez Canal and Egypt
With Egypt’s growing readiness to implement policy, the country has witnessed the implementation of some great national projects, the most important of which is the new Suez Canal project: the development of the existing Suez Canal and the area alongside the canal. There was also a national security objective for Egypt, whereby it aimed to transform itself into a world centre of logistics and industry to act as a catalyst for economic development for the country. The location’s advantages have allowed it, to attain to a certain degree of world centrality in terms of industrial economic zones, distribution of transit trade, and logistics services for ships transiting the Suez Canal (Mostafa Kamel Al-Hegazy, 2013). The challenges Egypt faced in the political realm arising from domestic, regional and global downturns have hindered it from obtaining the desired benefits. Suez Canal, considered as one of the most important navigation lanes in the world, plays its part in facilitating one tenth of the globe’s trade. However, annual revenues, did not exceed above $5 billion in the previous years. In spite of expansion and deepening attempts, most giant ships cannot go through the canal and are forced to turn around the Cape of Good Hope. The present Suez Canal is not optimally exploited despite its economic importance as there are no adjunct port services, logistics and industrial centres, ship maintenance and repair workshops, storage facilities and transit trade, unlike in other states of the region, such as the Port of Jabel Ali project in Dubai, the United Arab Emirates. Therefore, it cannot not cope with such challenges except through its contribution to providing attractive privileges for global trade transit.
Egypt’s New Suez Canal
The revenues of the Egypt’s Suez Canal reached 5.9 billion U.S dollars in the fiscal year of 2018-2019, an all-time record in the waterway’s history, Chairman of the Suez Canal Authority Mohab Mamish said, “The canal made an increase of 300 million dollars or 5.4 percent increase compared to the previous fiscal year.”The new channel in the Mediterranean and Red Sea is 9.5 kilometers long and 18 meters deep has been aimed to reduce navigation time for ships to 11 hours from about 18-22 hours, and cut vessels’ waiting time to three hours from a previous delay of eight to 11 hours. The new channel was opened in 2015 amid doubts about the feasibility of the project in light of the uneasy global economy and instability in the Middle East. It is reported that 70,679 ships with record 4.268 billion tons have crossed the canal since its inauguration.
New development projects and up gradation of the canal have helped improve the performance and earn greater revenues in the short period of time. The importance of the new channel is likely to pave way for building other mega-level projects including the tunnels that connect the three canal cities, notably Suez, Ismailia and Port Said, as well as the Sinai Peninsula. The tunnels, two of which were built under the canal, will facilitate the development of the Suez Canal Corridor Area Project, which was launched in August 2014 and aims to increase the role of the Suez Canal, in the regions international trading.
Cairo is betting on the project for the development of the “Suez Canal axis”, which is anticipated to open investment for the Egyptian economy through the localisation of re-export industries, such as shipbuilding and vehicle manufacturing. Re-export operations would result in major activities in shipping and traffic through the canal, which is expected to increase demand for logistics services, whether fuel supply, maintenance or food supplies in addition to opening tourism opportunities for the vessels’ crews. Traditionally, the only revenue from the Suez Canal has come from transit fees. The Suez Canal Authority announced a record $3.6 billion in revenues for the last fiscal year but that level was considered below potential and weak, compared to Singapore’s experience in providing logistics services to ships, which generate about ten times as much revenue. A total of 70,679 ships, transporting 4.3 billion tonnes of cargo, transited the Suez Canal in the previous year. The canal last year also recorded the highest number of vessel crossings in one single day, 81 vessels with 6.1 million tonnes of cargo, the highest number of transiting vessels in one day to date.
Royal Caribbean’s Quantum-Ultra-class cruise ship Spectrum of the Seas, the largest passenger ship in the world, crossed the Suez Canal on its maiden voyage. The ship was 347.1 metres long, 41.4 metres wide and displaces 170,000 tonnes. It could accommodate more than 4,200 passengers and has a crew of 1,500. It has reportedly paid about $1 million in transit fees to SCA.The Megamax 24, one of the world’s largest container ships with a capacity of 23,000 containers, also crossed the canal recently. The 400-meter ship had a beam of 61.4 meters, a little under the maximum permissible – 62.1 meters – for transits through the Canal. The 232,000 gross ton ship has a draft of 16 meters, with a total capacity of 23,000 TEUs and the ability to stack 24 rows of containers on board, compared to the previous “Megamax 23” class, with a capacity ranging from 18,000 to 20,000 TEUs in 23 rows. Megamax 23 vessels have a beam of 59 meters. The New Suez Canal is the result of the most recent expansion project of the waterway to accommodate larger vessels, it was inaugurated four years ago on August 6, 2015.