CAIRO: Suez Canal revenues totaled $348.2 million in June, up from $342.4 million the month before, according to results released Wednesday.
The latest figures from the Suez Canal Authority indicate a slight recovery from the dismal numbers it posted over much of the first half of the year. This improvement signals a broader recovery for the canal, which hit its low in February, bringing in only $301.8 million.
The recovery of the canal has been important for the Egyptian government, which plans to run a deficit this year, until the global economy gets back on track. Canal revenues are a critical contribution to the state’s overall revenue.
“The generated revenues are in line with our expectations of $4.77 billion in fiscal year 2008/2009. We believe that the increase in June is a positive indicator, given that February, June and September are times of the year when revenues usually dip, due to seasonal factors, leading us to expect lower than usual revenue levels, wrote investment bank Beltone Financial in a statement.
Despite signs that the canal’s monthly revenue may be on an upswing, the numbers indicate that the waterway is operating at revenue levels far beneath 2008.
Revenues in June were down 26.1 percent over numbers a year earlier – arguably a more significant statistic given the cyclical nature of the canal. Still, it’s an improvement on the 28.6 percent year-on-year decline that occurred in May.
Despite the decline, revenue for the 2008/09 fiscal year flirted with record territory, establishing the second highest earning year in the canal’s history. Revenue for the past 12 months hit $4.74 billion, only surpassed by the previous year’s revenue of $5.11 billion.
Despite the woes of the past year, the annual revenue for the fiscal year beat 2006/07 numbers by more than half a billion dollars.
Revenues peaked in 2007-2008, according to Beltone, because record energy prices meant that using alternative routes was no longer feasible.
When energy prices tumbled and the economy slowed over the past year the government took steps to retain the sort of vessels that were forced to plow the canal’s waters when energy prices were high.
“The Canal Authority had decided to keep transit fees stable in 2009, while granting incentives and discounts to certain vessels, to accommodate the impact of the global economic slowdown, said Beltone.
Despite an improvement in revenue, the incentives to keep ships running through the canal appear to be yielding mixed results. A total of 1,401 ships passed through the canal in June, as opposed to 1,468 in May.
There was an 8.1 percent drop in the number of ships passing through between fiscal year 2007/08 and 2008/09.
Current efforts to deepen the canal, though, may help reverse course on the sliding number of ships that pass through each month. The Canal Authority is undertaking a project to deepen the canal from 62 feet to 66 feet, a project it says will be finished by the end of 2009.
According to Beltone, plans to deepen the canal to 72 feet were scrapped early on because it would make room for only a small percentage of more ships.