The Suez Canal: A Vital Artery of Global Trade

The Suez Canal is a 193-kilometre (120-mile) artificial waterway in Egypt, connecting the Mediterranean Sea at Port Said in the north to the Red Sea at Suez in the south. Completed in 1869, it allows ships to transit between Europe and Asia without circumnavigating Africa via the Cape of Good Hope, reducing voyage times by approximately 8,000–10,000 kilometres (4,300–5,400 nautical miles).

The canal is:

• Single-lane for most of its length with passing bays and convoys scheduled daily.
• Continuously upgraded—most recently with the 2015 New Suez Canal expansion, which created a parallel channel in parts to increase capacity and reduce transit times.

The canal is operated by the Suez Canal Authority (SCA) and operates 24/7, with a transit typically taking 12–16 hours. Navigation is strictly controlled; all vessels must be piloted by Egyptian pilots. The traffic is also divided into northbound and southbound convoys, often requiring vessels to anchor at Great Bitter Lake while awaiting passage. The Great Bitter lake is a deep expanse of water half way through the canal with good anchor holding ground for vessels to await the other convoy to pass. The canal is of vital strategic importance for the following reasons:

1. Key Global Trade Route

• Handles about 12–15% of global maritime trade, including:
• ~30% of container traffic
• ~10% of seaborne oil
• ~8% of LNG shipments
• Crucial for linking the Asia-Europe trade corridor—especially for goods moving between China, India, and Europe.

2. Time & Cost Efficiency

• Saves 8–12 days of transit time compared to sailing around southern Africa.
• Lower fuel consumption and faster delivery increase efficiency and competitiveness for carriers.

3. Revenue for Egypt

• One of Egypt’s largest sources of foreign currency.
• Generated over $9.4 billion in revenue in FY 2022–23.
• The canal also supports port cities, shipbuilding, bunkering, and maintenance hubs.

The canal has vulnerabilities, some of which were reflected in 2021. As a narrow and shallow waterway, the canal is vulnerable to blockages—as highlighted by the 2021 Ever Given incident. On the morning of 23 March 2021, the Ever Given—a 400-metre long, 59-metre wide Ultra-Large Container Ship (ULCS) owned by Japan’s Shoei Kisen Kaisha and operated by Evergreen Marine—ran aground in the southern section of the Suez Canal near the city of Suez.

In response to high wind gusts of 40 knots, the Canal Pilots increased speed which resulted in the ship becoming adversely affected by the hydrodynamic forces. This eventually resulted in the ship veering towards the East Bank of the canal and grounding. The momentum of the ship was arrested quickly causing the ship’s stern to also beach on the opposit bank, effectively wedging the ship in the canal and blocking it.

Ever Given became wedged diagonally across the canal, with her bow embedded in the eastern bank and stern touching the western bank. The incident completely blocked all traffic through the canal—one of the busiest waterways in the world with over 420 ships queued at both ends of the canal over the following days, including oil tankers, bulk carriers, and container ships.

The blockage caused an estimated $9–10 billion in daily trade disruption, delaying deliveries of oil, manufactured goods, and raw materials. Some shipping lines diverted vessels around the Cape of Good Hope, adding up to two weeks to voyages and significantly increasing fuel costs. The disruption exacerbated global supply chain pressures, especially in the wake of COVID-19-related backlogs.

The SCA demanded compensation from the ship’s owners for losses and reputational damage—initially $916 million, later negotiated to a lower confidential sum.

The Ever Given was impounded for over three months until a settlement agreement was reached in July 2021.

The incident prompted calls for:

• Reassessing canal design and widening works (particularly in the southern stretch).
• Stricter vessel traffic control and pilotage procedures.
• Review of the safe navigation of ULCSs in constrained waterways.

In response to this incident, the SCA is widening and deepening key southern stretches of the canal to improve navigation safety and throughput with Digital scheduling and tracking systems to reduce bottlenecks and improve traffic flow.

The Ever Given grounding was a stark reminder of the vulnerability of global trade to chokepoint disruptions. It triggered a reassessment of maritime logistics, infrastructure capacity, and the growing scale of containerships navigating narrow and heavily trafficked passages.

Geopolitical instability

The Canal’s proximity to regional conflicts (e.g., Red Sea attacks, Middle East tensions) can impact security and insurance costs. This has recently been highlighted by the attacks in the Southern Red Sea.

The escalation began in October 2023, when Yemen’s Houthi rebels launched missile and drone strikes on commercial vessels in the Red Sea—particularly those connected to Israel—marking the start of what became known as the “Red Sea crisis”.

From November 2023 to early 2024, over 60 merchant vessels were targeted, with more than 30 ships damaged and at least two sunk. Container vessel transits through Suez dropped by ~50–66% in early 2024, as shippers rerouted around the Cape of Good Hope. A 50% drop in canal trade was reported in January–February 2024 compared to the previous year. This resulted in Egyptian Suez revenues plunging from $9.4 bn (2022–23) to about $7.2 bn (2023–24)—a loss of roughly $2 bn attributed to reduced traffic. Only 13,213 ships transited in 2024, down from 26,000—a near 50% drop. Up to 90% of container ships avoided the Suez/Bab-el-Mandeb corridor, adding 10–15 days and millions in extra fuel to voyages.

Since October 2023: Transits of Ultra Large Containerships dropped to zero for over 20 consecutive months, as carriers rerouted via the Cape amid Houthi missile and drone threats with CMA returning to the Canal with the CMA CGM Osiris which transited the Canal in June 2025. This makes the first ULCC transit since the attacks.

In short, Houthi attacks in late 2023 and early 2024 drastically cut Suez Canal traffic and revenue, as global shippers rerouted to avoid escalating maritime security risks. Although military escorts and limited de-escalation have eased some pressure, shipping levels and confidence remain well below pre-crisis norms.

CMA CGM is executing a nuanced schedule strategy, combining:

• Suez on eastbound legs to reclaim time and reduce delay risk.
• Cape on westbound legs to avoid war‑risk premiums and safety exposure.

This “best‑of‑both‑routes” approach represents a measured test of operational agility under shifting geopolitical and economic conditions. Carriers and cargo stakeholders will be watching closely through the summer to see if this becomes a sustainable model.