MSC, Suez Canal Authority discuss Red Sea crisis impact on global shipping

EGYPT – Mediterranean Shipping Company (MSC) CEO Soren Toft has confirmed that the company will not return to routing vessels through the Red Sea until the region stabilizes.

Toft made this statement during a video conference with Suez Canal Authority (SCA) chairman Ossama Rabiee, where they discussed the ongoing security crisis and its effect on global shipping.

Several SCA board members and a delegation of MSC Egypt representatives, including MSC Egypt CEO Tarek Fahmy, Business Development Manager Karim Fahmy, and Operation Manager Ezz Eldeen Salem, attended the meeting.

The Red Sea crisis began on 19 October 2023 and has been ongoing for over 1 year and 5 months. It continues to disrupt global trade and supply chains, particularly affecting shipping routes through the Suez Canal.

Discussions centered on developments in the Red Sea and Bab al-Mandab, reviewing the navigation policies of MSC through the Suez Canal.

MSC’s position on alternative routes

Toft emphasized that rerouting via the Cape of Good Hope is not MSC’s preferred option. “We do not prefer navigating around the Cape of Good Hope, and we are waiting for the situation to stabilise to return to transit through the Suez Canal.” He highlighted concerns over the lack of navigational services on the Cape route, which increases risks for vessels.

Rabiee assured MSC that the SCA remains committed to supporting its clients despite the challenges. He noted that the authority has continued to offer navigational and maritime services without disruption since the crisis began.

Additionally, the SCA introduced a new set of services, including maritime salvage, ship repair and maintenance, crew change support, and water ambulance services.

Suez Canal’s response to the crisis

Rabiee provided updates on the authority’s infrastructure improvements, citing the recent completion of the Southern Sector Development Project. This initiative enhances the passage for larger vessels, ensuring a safer and more efficient transit through the canal.

He also highlighted that the SCA-affiliated Port-Said Shipyard has been actively involved in ship maintenance and repair services.

“The shipyard provided maintenance and repair services to MSC Rossella III on board the floating dock, Fakhr Al-Qanah.” Additionally, the shipyard is replacing the bulbous bow of MSC Renaissance with an in-house designed version aimed at reducing fuel consumption and lowering carbon emissions, a first for an Egyptian facility.

Impact on fresh produce exports

The disruptions in the Red Sea have severely affected the fresh produce sector, particularly in East Africa. Exporters, including those in Kenya, have reported substantial losses due to extended transit times and higher costs.

With vessels forced to take the Cape route, transit times have increased from 18-20 days to 40-45 days. This delay has led to higher spoilage rates for perishable goods such as fruits and vegetables, cutting into profit margins.

According to industry reports, freight costs have also surged by up to US$4,000 per container. This has forced exporters to explore alternative markets in Asia and Gulf Cooperation Council countries, as access to key European Union markets becomes less viable.

Despite these challenges, stakeholders remain hopeful that stability in the Red Sea will eventually allow a return to normal shipping operations, reducing transit times and easing the financial strain on affected industries.

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