Egypt Plans to Double Suez Canal Capacity

###Analysis

Egyptian President Abdel Fattah al-Sisi is overseeing a large-scale expansion of the Suez Canal. The project could nearly double the canal’s capacity, enabling it to handle approximately 100 vessels a day. The inherited project will require the participation of dozens of local companies — most of which are affiliated with the military — and could create thousands of construction jobs. However, the current state of Egypt’s economy raises doubts as to whether the government will be able to finance the project, which al-Sisi plans to partly fund through donations from Egyptian citizens. The rush to complete the project in one year also raises serious questions about the feasibility of the plans.

The Suez Canal is Egypt’s most strategic national asset. The waterway provides a critical short passage for maritime trade between Europe and Asia, linking the Northern Atlantic with the broader Indo-Pacific basin. Before the completion of the canal, maritime trade from northern Europe or the Mediterranean had to sail along virtually the entire coast of Africa before reaching the Arabian Peninsula or the Indian Ocean. The alternative was to risk costly and dangerous overland trade routes. The canal has reduced transit times by weeks, slashing the associated fuel costs.

The expansion of the Suez Canal aims to increase the flow of international trade through Egyptian-controlled waters, thereby increasing the transit point’s strategic value. Cairo has not announced details of how it will achieve its goal of reducing shipping times, but the most likely course of action would be to add a lane through a canal bypass, reducing wait times by allowing north and southbound vessels to pass through the canal at the same time. Egypt also plans to develop both banks of the canal, building advanced cargo ports, storage facilities, manufacturing sites and special economic zones to encourage foreign investment. This would transform the canal from a transit route into a large-scale transshipment point, likely located at the north end on the Mediterranean Sea.

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