RED SEA SHIPPING ISSUES – JANUARY 2024 (QUICK SUMMARY 1)
Situation – Since NOV-2023, Houthi rebels in Yemen have launched attacks on commercial shipping liners passing through the Bab El Mandeb strait in the Red Sea. This is one of the most strategic waterways in the world which connects EU/Mediterranean to the Middle-East, Asia, East Africa and ISC. The Suez canal is used by approximately 30% of the world’s global container shipping and reports suggest that nearly $USD 200BN of containerized cargo has been diverted away from this waterway. Red Sea container ship crossings in January are estimated to be down nearly 30% versus a typical period, with the vessels diverted via the longer Cape of Good Hope routing. Some liners are getting escorts via national naval/defense forces and an international coalition of navies is attempting to patrol the area and offer safe passage. Steamship lines are adamant that they must protect their crews and cargoes.
Impacts – There are wide-ranging impacts both commercially & operationally and our global partners must be aware of the current volatility, which may worsen still (i.e. missile strikes on Houthi rebels this last one week)
- Asia/ISC/ME – Europe and v.v. sailing times are increased by minimum 2 weeks on average with the diverted routing around Cape of Good Hope, increasing container transit times and tying up equipment for longer periods at sea (potentially impacting container supply & positioning of stocks)
- Higher fuel burn due to longer sailing routes mean higher costs which are passed on as surcharges
- Increased security measures & insurance premiums are passed on as customer surcharges.
- Container rate price increases (especially foreseen prior to Chinese New Year and especially on Asia-EU-Asia routing but not exclusively). Reports speculate that the average 40ft container pricing between Asia and Europe has risen over 115% on the spot market week on week). Continued rate volatility foreseen