Happy Wednesday everyone!

The Middle East’s economic landscape is shifting, with key developments across trade, tech, and transportation. Egypt’s Suez Canal is losing $800 million per month as Red Sea disruptions reroute global shipping. In Saudi Arabia, Neom’s futuristic air taxi plans face uncertainty after China’s Wanfeng acquired the bankrupt Volocopter. Meanwhile, UK-based Zapp is planning to enter Dubai, adding more competition to the region’s booming rapid-delivery sector.

Let’s dive in!

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Egypt's Suez Canal Faces $800M Monthly Revenue Loss Amid Regional Disruptions

📰 What is it about?

• Egypt's President Abdel Fattah El-Sisi announced that the Suez Canal is losing around $800 million in revenue every month due to disruptions caused by regional instability.

• Attacks by Yemen’s Iran-backed Houthis in the Red Sea have forced vessels to reroute around Africa, avoiding the Suez Canal and driving up shipping costs.

• The disruptions, which began in November 2023, are linked to the ongoing conflict in Gaza, where the Houthis have pledged to support Palestinians.

💡 Why it matters?

• The Suez Canal is one of the world’s most crucial shipping routes, and any disruption affects global trade.

• Egypt’s losses are substantial, with President El-Sisi previously estimating that the Suez Canal could lose around $7 billion in revenue in 2024.

• The attacks are also impacting the cost of global shipping, as vessels are forced to take longer routes around Africa, increasing shipping times and costs.

🔜 What’s next?

• The Houthis have vowed to continue their attacks, including targeting US and Israeli vessels in the Red Sea in retaliation for recent military actions.

• As the conflict continues, the Suez Canal may face further disruptions, leading to additional financial strain on Egypt’s economy and more challenges for global shipping.

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Markets

Chinese Firm Acquires Volocopter, Raising Questions Over Neom’s Air Taxi Plans

📰 What is it about?

• Zhejiang Wanfeng Auto Wheel, a Chinese automotive and aerospace group, has acquired German air taxi startup Volocopter for $11 million after the company filed for insolvency in December.

• Volocopter was a key partner in Saudi Arabia’s Neom giga-project, supplying electric vertical take-off and landing (eVTOL) aircraft for its futuristic, zero-emissions transport system.

• The acquisition includes Volocopter’s assets and intellectual property, with Wanfeng making the purchase through its German subsidiary, Heptus 591.

💡 Why it matters?

• Neom had invested $175 million in Volocopter and ordered 15 aircraft, expecting the company to be the exclusive operator of its air taxi network. The collapse raises uncertainty over these plans.

• The move highlights the volatility in the emerging air mobility sector, where even well-funded companies backed by major investors like Mercedes-Benz, Honeywell, and Intel face financial struggles.

• Volocopter’s European certification efforts and planned 2024 commercial launch could be affected, potentially impacting projects in cities like Neom, Paris, and Dubai.

🔜 What’s next?

• It remains unclear how Wanfeng’s acquisition will affect Neom’s air taxi ambitions and whether the project will need a new operator.

• Neom’s leadership, including Investment Fund CEO Majid Mufti, may need to reassess their air mobility strategy or seek alternative partners.

• The broader eVTOL industry will be watching to see if Wanfeng can revive Volocopter’s technology or pivot its assets toward other applications.

Zapp's Expansion into Dubai: A New Player in the Crowded Gulf Delivery Market

What is happening?

• Zapp, a British rapid-delivery startup, is planning to launch in Dubai later this year, as per Bloomberg.

• The company specializes in delivering groceries and other items in under 15 minutes, a service it developed during the pandemic.

• Zapp aims to tap into the Middle East’s growing delivery market, which is becoming increasingly competitive.

• The startup has already proven successful in the UK, generating over $100 million in sales in 2024 by partnering with premium brands like LVMH and Fortnum & Mason.

Why it matters:

• The Gulf delivery market is experiencing a surge in competition, with established players like Talabat and Careem, and new entrants like Meituan’s Keeta app.

• Zapp’s focus on pricier goods helps it differentiate from others in the market, a strategy that has improved its margins and order sizes.

• Revenue from online deliveries in the GCC region is expected to reach $18.9 billion in 2025, with a strong annual growth forecast, making it a prime market for expansion.

What’s next?

• Zapp is holding talks with regional delivery companies like Talabat and Careem for potential partnerships.

• The company is continuing to build its presence in Dubai, hiring locally and preparing for a possible launch.

• Zapp’s entry into the Gulf market could influence the competition, with new pricing strategies and offerings likely to emerge as the region’s delivery market evolves.

🔍In other news…

1. HH Sheikh Tahnoon’s US visit reaps rewards - partnership signed between Abu Dhabi Government, Microsoft, and Core42.

2. Riyadh adds 10 times as much office space as Dubai.

3. US maker of ‘flying ferries’ is building on UAE backing.

4. EU conference pledges $6.3 billion for Syria's recovery.

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