Tuesday,17 July, 2018
Current issue | Issue 1137, 28 February - 6 March 2013
Tuesday,17 July, 2018
Issue 1137, 28 February - 6 March 2013

Ahram Weekly

Not plain sailing

Ports and shipping are feeling the brunt of the unrest in Egypt’s Suez Canal governorates and in the country at large, reports Niveen Wahish

Suez Canal
Suez Canal
Al-Ahram Weekly

Almost two weeks of civil disobedience in Egypt’s Suez Canal governorates have been taking their toll on the neighbouring ports, with the East Port Said Container Terminal being among the hardest hit. A statement by the Suez Canal Container Terminal (SCCT) last week said that workers had been unable to reach the terminal due to road blockages, causing work to be suspended.
“It is clear that the present situation is not good for business and is likely to cause business to shrink, hence providing fewer opportunities for Egyptians,” said SCCT Managing Director Klaus Holm Laursen in a statement. The statement added that “shipping is an international business and has opportunities to go to other countries, which again may lead to longer-term losses for Egypt.”
With roads closed by protesters, the Port’s operations have been paralysed. “Workers are unable to reach the Port, goods intended for shipping out are not reaching the Port, and goods sitting at the Port are not being loaded,” Zeinab Adel, trade and marketing manager with Seago Line, part of the AP Moller Maersk Shipping Line, told Al-Ahram Weekly.
She said that work in East Port Said had been slow for the past 20 days, adding that this had meant that perishable goods intended for export were going bad and production lines were coming to a standstill because factory stores were filling up.
Egyptian importers could not get their goods out of the Port, she said, and some ships were being diverted to other ports to unload.
However, while the industrial unrest has affected the ports it has left canal transit untouched, according to Tarek Hassanein, spokesperson for the Suez Canal Authority, who said that navigation in the canal was safe and running normally without disruptions.
Yet, it seems that canal transit had been slightly affected even before the current unrest. Minister of Planning and International Cooperation Ashraf Al-Arabi this week said that revenue from the Suez Canal during the first half of fiscal year 2012/13 had fallen by 3.6 per cent, adding that revenues from July till December 2012 had reached $2.6 billion.
Ahmed Mustafa, manager of the Pacific International Line, a Singaporean line, attributed the slight drop in canal transit not to a lack of safety but to the overall political situation in Egypt and the accompanying unrest.
Mustafa said that before the 25 January Revolution, ships had used to dock in all of Egypt’s northern Mediterranean ports, but since then and as a result of the deterioration in the security situation both ship owners and clients had become more wary. His company now limited its transactions to Sokhna Port, he said.
He also listed other factors affecting trade and therefore also canal traffic, saying that importers were doing business on credit and that this was limiting their capacity. Furthermore, the Egyptian market was not receiving the same amount of imports as in the past, and importers were reluctant to place new orders because they were uncertain about the market, Mustafa said.
“Business is two-thirds less than what it used to be,” Mustafa said, adding that the depreciation of the Egyptian pound would likely make things worse than during the past two years combined. While the current crisis had not affected his business because it had not affected Sokhna Port, he had suffered when the latter port had been affected by prolonged labour strikes, the latest of which ended some 10 days ago.
Mustafa said that interruptions to business at the ports means that the end consumer would be affected because the more time goods were left in the port, the more storage expenses the importer or exporter would incur. “In the end, they will put higher price tags on the products they are selling,” he said.
He was not worried about the safety of canal navigation or the number of vessels using the waterway.
Ihab Morsi, head of the International Navigation Line, agreed, saying that giving up transit through the Suez Canal would be very difficult and expensive for ship owners. “Only the very large shipping lines can afford to take the much longer route of the Cape of Good Hope,” Morsi said, adding that “unless, God forbid, the canal is blocked or there is a war, no one will stop using the waterway.”
However, Mustafa said that business could nevertheless slow down, suggesting that because of the unrest and recurrent interruptions, some ship owners could take Egypt off their routes, leaving a smaller number of operators. These could merge their operations, he said, leading to “a smaller number of ships passing through the canal and lower transit fees.”
During the past two years, revenue from the Suez Canal has been one of Egypt’s main sources of foreign currency, along with remittances. In 2012, canal revenues reached $5.1 billion compared to $5.2 billion in 2011. Over the past two years, the canal has almost returned to the $5.3 billion level of 2008, the highest since 2000 and before the global financial crisis affected business.
Another source at the canal ports who preferred to remain anonymous warned that the recurrent interruptions in business could threaten the rating of Egyptian ports. “If a port is rated as risky, that could mean lower traffic and higher insurance on shipping lines dealing with it,” he explained.

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