Unrest in Egypt and Piracy Beyond the Suez is Deterring Ship Owners

March 2013

Due to the continuing unrest in Egypt, many shipping companies are becoming concerned about the security situation involving the Suez Canal. This vital, 120 mile waterway provides a key shortcut for ships to travel from the Mediterranean to easily access the ports of India, Africa and eastern Asia.

However, because the canal potentially faces the threat of complete closure, shipping companies are exploring alternatives to using the canal– but the cost to circumvent the canal involves astronomically higher fuel and time costs.

But even if the canal isn’t shut down, the general lawlessness that seems to be engulfing the nation is a concern for merchant vessels who are already used to keeping piracy on the forefront of their security concerns. Many are wondering, even if the canal is open, is it safe?

Shipping companies may increase their outreach to private security companies, who are having much success securing cargo in the Indian Ocean. There, the rates of piracy have dropped dramatically due to the protection that these firms can provide. Updating vessels and crews with counter-piracy strategies can be enough, but oftentimes putting armed guards and physical deterrents on vessels is required.

Egypt itself would suffer if companies decide to find alternate routes to Asia– a big source of income for the country is charging fees for ships to transit the canals. The canal is already in a time of decline, as the possibility of piracy beyond the waters of the canal has dissuaded unsecured vessels from traveling the Suez and paying the fees.

However, high fuel prices can actually be Egypt’s friend in this regard. If companies look at the cost/benefit of finding alternate ways through the Canal, they will see that spending extra fuel to circumnavigate the entire continent of Africa is vastly prohibitive.

Paying extra for security and facing uncertainty head on is the way to profit and efficiency for shipping companies.