How does the Suez canal affect world trade?

Without the Suez Canal, ships would sail more than 7000 nautical miles (13,000km) between Asia and Europe. This distance would increase the cost and length of shipping by 15-20 days, putting European firms at a competitive disadvantage in the trade with the Far East.

Shorter Sailing Distance

The canal saves ships thousands of miles by providing a shortcut through the Isthmus of Suez.

Faster Trade

The reduced travel distance also expedites trade between Asia and Europe.

Increased Trade Volume

The shorter distance, and cost-effectiveness of the Suez canal has encouraged increased trade between Asia and Europe.

Diversion of Ship Routes

The canal serves as a strategic transit route, shifting ship routes away from Cape of Good Hope.

Impact on Global Economy

By facilitating efficient trade, the Suez Canal has promoted global economic growth, making an immense contribution to the global GDP and international trade.

Impact on Egypt's Economy

The canal generates substantial revenue for Egypt through tolls. In 2021, the canal recorded $6.3billion in revenue, accounting for 2% of Egypt's GDP.

Alternative Routes

Despite its importance, the Suez Canal is not without alternatives. During times of blockage or political unrest, ship can take the lengthier route around the Cape of Good Hope.