Red Sea crisis: Container shipping rates spike, customers are at risk of being affected

Consumers around the world are expected to bear the brunt of the ongoing crisis in the Red Sea after missile attacks on cargo ships threw supply chains into chaos. .

Houthi attacks on cargo ships passing through the Red Sea and Gulf of Aden could reduce the number of ships passing through the Suez Canal, possibly leading to a global supply chain crisis.

Leading shipping industry expert Peter Sand warned that Houthi missile and drone attacks on cargo ships passing through the Red Sea and Gulf of Aden could reduce the number of ships passing through the Canal. Suez, which could cause a global supply chain crisis.

After this attack, there were reports of further attacks by Houthi forces on other ships, including a missile attack on the Hapag-Lloyd ship Al Jasrah, causing a fire. but there were no injuries, and a similar incident occurred against the container ship MSC Palatium III.

True to Mr. Sand's warning about the impact on the Suez Canal, Maersk shipping company said on December 15 that it would suspend all operations through the Red Sea, and Hapag-Lloyd is also said to be considering doing so. appears similar.

Prices will increase if ships have to go around Africa. Up to 1.7 million teu could be affected by chaos similar to the Suez blockade of the Ever Given.

Latest data from shipping analytics firm Xeneta shows spot rates in the ocean freight market spiked 20% since Friday (December 15) after shipping companies decided to temporarily suspend voyages through the Red Sea amid attacks by the Houthi militia.

"Ships are currently being rerouted via the Cape of Good Hope, but this not only adds 10 days to sailing time but also costs up to $1 million more in fuel for each round trip between the Far East and North Au...

Mr. Sand added: “We have seen shipping lines and shipowners choose to adjust the itineraries of ships not entering the Red Sea and Gulf of Aden areas,” and explained, “Due to the importance of the Suez Canal for With the global supply chain, even a small disruption can have big consequences. Therefore, the main alternative is for ships to detour down to the Cape of Good Hope, which adds up to 10 days to transit time for routes from Asia to Northern Europe and the Mediterranean.

“We are now seeing action from politicians, but we do not know how or when this coalition will succeed in opening safe passage for ships through the Red Sea and Gulf of Aden. Everything is at stake here because the free flow of global trade affects nearly every human being on earth. The Suez Canal is extremely important with billions of dollars of goods passing through every day from the Far East to Northern Europe, the Mediterranean and the US East Coast," Sand said.

The longer this disruption lasts, the more costly and painful it becomes, according to Sand, who believes supply chains have yet to fully recover from the pandemic, “with schedule reliability between the Far East and Northern Europe only at 64%” and warned that this latest crisis could set that recovery back even further.

He added, "We could also see this impact current negotiations between shippers and ocean freight carriers on long-term contracts for 2024. Shippers may feels concerned that long-term freight rates may track the spot market and increase significantly as a result of this freight crisis."

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