Suez Canal Economic Impact

Suez Canal Economic Impact

Economically, after its completion, the Suez Canal benefited primarily the sea trading powers of the Mediterranean countries, which now had much faster connections to the Near and Far East than the North and West European sea trading nations such as Great Britain or Germany. The main Habsburg trading port of Trieste with its direct connections to Central Europe experienced a meteoric rise at that time.

The time saved in the 19th century for an assumed steamship trip to Bombay from Brindisi and Trieste was 37 days, from Genoa 32, from Marseille 31, from Bordeaux, Liverpool, London, Amsterdam and Hamburg 24 days. At that time, it was also necessary to consider whether the goods to be transported could bear the costly canal tariff. This led to a rapid growth of Mediterranean ports with their land routes to Central and Eastern Europe. According to today's information from the shipping companies, the route from Singapore to Rotterdam through the Suez Canal will be shortened by 6,000 kilometres (3,700 mi) and thus by nine days compared to the route around Africa. As a result, liner services between Asia and Europe save 44 per cent CO2 (carbon dioxide) thanks to this shorter route. The Suez Canal has a correspondingly important role in the connection between East Africa and the Mediterranean region.

In the 20th century, trade through the Suez Canal came to a standstill several times, due to the two world wars and the Suez Canal crisis. Many trade flows were also shifted away from the Mediterranean ports towards Northern European terminals, such as Hamburg and Rotterdam. Only after the end of the Cold War, the growth in European economic integration, the consideration of CO2 emission and the Chinese Silk Road Initiative, are Mediterranean ports such as Piraeus and Trieste again at the focus of growth and investment.

The Suez Canal set a new record with annual revenue of $9.4 billion in USD for the fiscal year that ended 30 June 2023.

Suez Canal Alternative Routes

Before the canal's opening in 1869, goods were sometimes offloaded from ships and carried overland between the Mediterranean and the Red Sea.

Cape Agulhas

The main alternative is around Cape Agulhas, the southernmost point of Africa, commonly referred to as the Cape of Good Hope route. This was the only sea route before the canal was constructed, and when the canal was closed. It is still the only route for ships that are too large for the canal. In the early 21st century, the Suez Canal has suffered from diminished traffic due to piracy in Somalia, with many shipping companies choosing to take the long route instead. Between 2008 and 2010, it is estimated that the canal lost 10% of traffic due to the threat of piracy, and another 10% due to the financial crisis. An oil tanker going from Saudi Arabia to the United States has 4,345 km (2,700 mi) farther to go when taking the route south of Africa rather than the canal.

Northern Sea Route

In recent years, the shrinking Arctic sea ice has made the Northern Sea Route feasible for commercial cargo ships between Europe and East Asia during a six-to-eight-week window in the summer months, shortening the voyage by thousands of kilometres compared to that through the Suez Canal. According to polar climate researchers, as the extent of the Arctic summer ice pack recedes the route will become passable without the help of icebreakers for a greater period each summer.

The Bremen-based Beluga Group claimed in 2009 to be the first Western company to attempt using the Northern Sea Route without assistance from icebreakers, cutting 6,400 kilometres (4,000 mi) off the journey between Ulsan, Korea and Rotterdam, the Netherlands.

Cape Horn

Sailing ships, such as the windjammers in the heyday of the Great Grain Race between Australia and Europe during the 1930s, often preferred the Cape Horn route when going to Europe, due to prevalent wind directions, even though it is slightly longer from Sydney to Europe this way than past Cape Agulhas.

Negev Desert Railway

In February 2012, Israel announced its intention to construct a railway between the Mediterranean and Eilat through the Negev desert to compete with the canal. By 2019, the project had been put on indefinite hold.

Suez Canal Environmental Impact

The opening of the canal created the first salt-water passage between the Mediterranean Sea and the Red Sea. Although the Red Sea is about 1.2 m (4 ft) higher than the eastern Mediterranean, the current between the Mediterranean and the middle of the canal at the Bitter Lakes flows north in winter and south in summer. The current south of the Bitter Lakes is tidal, varying with the tide at Suez. The Bitter Lakes, which were hypersaline natural lakes, blocked the migration of Red Sea species into the Mediterranean for many decades, but as the salinity of the lakes gradually equalised with that of the Red Sea the barrier to migration was removed, and plants and animals from the Red Sea have begun to colonise the eastern Mediterranean.

The Red Sea is generally saltier and less nutrient-rich than the Mediterranean, so that Erythrean species will often do well in the 'milder' eastern Mediterranean environment. To the contrary very few Mediterranean species have been able to settle in the 'harsher' conditions of the Red Sea. The dominant, south to north, migratory passage across the canal is often called Lessepsian migration (after Ferdinand de Lesseps) or "Erythrean invasion". The recent construction by the Egyptian government of a major canal extension – allowing for two-way traffic in the central section of the canal and finally implemented in 2015 – raised concerns from marine biologists, who fear that it will enhance the arrival of Red Sea species in the Mediterranean.

Exotic species from the Indo-Pacific Ocean and introduced into the Mediterranean via the canal since the 1880s have become a significant component of the Mediterranean ecosystem. They already impact its ecology, endangering some local and endemic species. Since the piercing of the canal, over a thousand species from the Red Sea—plankton, seaweeds, invertebrates, fishes—have been recorded in the Mediterranean, and many others will clearly follow. The resulting change in biodiversity is without precedent in human memory and is accelerating: a long-term cross-Basin survey engaged by the Mediterranean Science Commission recently documented that in the first twenty years of this century more exotic fish species from the Indian Ocean had reached the Mediterranean than during the entire 20th century.

Historically, the construction of the canal was preceded by cutting a small fresh-water canal called Sweet Water Canal from the Nile delta along Wadi Tumilat to the future canal, with a southern branch to Suez and a northern branch to Port Said. Completed in 1863, these brought fresh water to a previously arid area, initially for canal construction, and subsequently facilitating growth of agriculture and settlements along the canal. However the Aswan High Dam construction across the Nile, which started operating in 1968, much reduced the inflow of freshwater and cut all natural nutrient-rich silt entering the eastern Mediterranean at the Nile Delta.

Suez Canal Economic Zone (SCZONE)

The Suez Canal Economic Zone, sometimes shortened to SCZONE, describes the set of locations neighbouring the canal where customs rates have been reduced to zero in order to attract investment. The zone comprises over 461 km2 (178 sq mi) within the governorates of Port Said, Ismailia and Suez. Projects in the zone are collectively described as the Suez Canal Area Development Project (SCADP).

The plan focuses on development of East Port Said and the port of Ain Sokhna, and hopes to extend to four more ports at West Port Said, El-Adabiya, Arish and El Tor.

The zone incorporates the four "Qualifying Industrial Zones" at Port Said, Ismailia and Suez, a 1996 American initiative to encourage economic ties between Israel and its neighbours.

Suez Canal Overview

Suez Canal Coordinates: 30°42′18″N 32°20′39″E

Suez Canal Length: 193.3 km (120.1 miles)
Suez Canal Maximum Boat Beam: 77.5 m (254 ft 3 in)
Suez Canal Maximum Boat Draft: 20.1 m (66 ft)
Suez Canal Locks: None
Suez Canal Navigation Authority: Suez Canal Authority
Suez Canal Construction Began: 25 April 1859
Suez Canal Date Completed: 17 November 1869
Suez Canal Start Point: Port Said
Suez Canal End Point: Suez Port

Suez Canal Route Map

km       W E

           Mediterranean Sea
           Approaches (Southward convoy waiting area)
0.0     Port Said

           Martyr Mujand Abanoub Girgis Bridge
           Al Salam Bridge
51.5   Eastern lane: New Suez Canal (2015)

           El Ferdan Railway Bridge (under construction)
76.5   Ismaïlia, SCA headquarters

           Tunnel Ismailia
           New Ismala
           Lake Timsah

           Maadia Al Qantarah Street
95.0   Deversoir

           Great Bitter Lake
           Small Bitter Lake

           Ahmed Hamdi Northern Tunnel
           Ahmed Hamdi Tunnel
           Martyr Ahmed El-Mansy Pontoon Bridge
           Overhead powerline

162    Suez, Suez Port
           Gulf of Suez (Northward convoy waiting area)
           Red Sea