A deep dive into Egypt’s plan to expand the Suez Canal:Egypt is working on a project to duplicate the remainder of the Suez Canal to better support two-way traffic, boost safety, and eliminate potential choke points.

What we know about the project: The project will duplicate around 80 kms of the Suez Canal that have not yet been duplicated — 50 kms in the north and 30 kms in the south. The expansion will increase the canal’s capacity by six vessels a day, allow the canal to accommodate vessels of all kinds and sizes, and reduce transit times to nine hours.

Where things currently stand: The Suez Canal Authority (SCA) will carry out environmental, engineering, and dredging studies over 16 months, before presenting the project to the Madbouly government, SCA boss Osama Rabie said last week. The feasibility study is also on track to be done within the same timeframe, which is being conducted by engineering consulting companies ACE Moharram Bakhoum and our friends at Dar Al Handasah.

The project needs to wrap up before 2034: Shipswill likely queue for longer hours to transit through the Suez Canal after 2034 unless the expansion is implemented due to an anticipated increase in the volume of global trade, Rabie told Asharq Business earlier this month (watch, runtime: 10:49).

But is it that urgent? A full duplication of the Suez Canal at this time will not necessarily affect its revenues or increase the number of ships crossing the waterway, Middle East Logistics and Consulting Group Chairman Karim Salama told Enterprise, adding that such an expansion would require the canal to hike its transit fees given that it’s self-funded. The canal’s revenues are only affected by global growth, developments in trade activity, oil prices, the value of the Special Drawing Rights — which influence how transit fees are calculated — and geopolitical conditions, Salama explained. The duplication would still be feasible, however, in the long term, Salama added.

Work is already underway to expand other stretches of the canal: The government has wrapped up the first phase of expanding the southern portion of the canal and is currently working on the second phase, which aims to double the canal across a 10-km segment.

Global trade would benefit from a wider canal: The United Nations Conference on Trade and Development (UNCTAD) has warned in a recent assessment report (pdf) that if disruptions in key waterways — the Red Sea, Black Sea, and Panama Canal — persisted it “could cause greater upheaval in global supply chains.”

THE CANAL AT A GLANCE-

“There’s no alternative to the Suez Canal” and that was proven in March 2021, when the canal was blocked for six days after Ever Given — one of the largest container ships in the world — ran aground in one of the canal’s lanes, Rabie said last year (watch, runtime: 5:50).

Remember: Suez Canal receipts fell 47% y-o-y in Januaryto USD 428 mn as the number of ships passing through the waterway dropped almost 37% to 1.4k — with many forced to reroute around the Cape of Good Hope thanks to Houthi attacks on vessels crossing the Red Sea.

Incentives may bring vessels back to the canal: Shipping firms have voiced their intent to resume navigation in the Suez Canal, but they asked for fee reductions and incentives to help offset the high ins. premiums and shipping costs triggered by the Red Sea attacks.

Other ways to ensure the canal maintains its competitive position: Establishing an export-focused industrial and logistics zone and free trade zones in cities surrounding the canal could help the canal secure more sustainable revenues, according to a report by Alternative Policy Solutions. The report also points to developing the canal’s services like establishing repair, maintenance, and service docks as another way to “exploit the potential of the canal beyond the current limited government efforts.”

ALSO- The Suez Canal wants to go green: The SCA has developed a plan to turn the canal into a “green canal” by 2030. The project is currently underway, with the environmental impact study in motion ahead of moving forward with the first phase.

** We dove into the authority’s efforts to greenify the canal in a Going Green last month.

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