Egypt’s Suez Canal is being used by fewer ships than usual as the trade route has become more expensive than the roundabout way via the Cape of Good Hope. The region may face a new wave of destabilization as Egypt has invested billions in the expansion of the channel and is now facing serious losses, a German newspaper DWN wrote.
It took almost 20 years to build the Suez Canal which has played a key role in international trade connecting the Red Sea and the Mediterranean for many decades.
As the ships in the past century have become bigger and the trade volumes have increased, the Egyptian government has decided to expand the channel due to its importance.
In August 2015, the government completed the expansion by building a 35-kilometer-long parallel channel in the area. The project cost about $8 billion and was primarily funded by selling investment certificates to private citizens.
The Egyptian authorities have expected the traffic to grow from 50 ships a day to 97, but low oil prices have led to a decrease in traffic. Fewer and fewer ships go through the Suez Canal, and now take the original route through the Cape of Good Hope at the southern tip of Africa instead, DWN wrote.
According to the German newspaper Deutsche Wirtschafts Nachrichten (DWN), over 100 ships had chosen the second route between October 2015 and December 2015, although the way is about 6,500 kilometers longer than the one which passes through the Suez Canal.
Low oil prices have affected the price of the marine diesel, which declined from $400 to $150 per ton. Taking into account the fact that drive-through costs in the Suez Canal reach about $350,000 per ship passage, the roundabout via the cape currently proves cheaper than the way through the Suez Canal.
The Suez Canal is an artificial sea-level passage in Egypt that enables ships to navigate between Europe and South Asia without going around Africa. Its unique location makes it very important to international maritime trade.
Source: Sputnik News