Carriers Avoid Red Sea as Tensions Rise

Carriers Avoid Red Sea as Tensions Rise
January 5, 2024 Hannah Marshallsay

The New Year has got off to a challenging start, with substantial delays and uncertainty regarding the arrival of containers from Asia as a result of tensions continuing in the Red Sea.

Following our last update, further attacks on commercial vessels by Yemen’s Houthi rebels, including a missile strike to a Maersk container ship last week, has led shipping lines to suspend the transit of vessels through the Red Sea until further notice. 

Despite the US-led Operation Prosperity Guardian (OPG) naval protection force’s presence to ensure secure passage to and from the Suez Canal, the latest attacks have caused shipping lines to redirect routes around the Cape of Good Hope. This has led to immediate impacts on transit times with cost increases to services resulting from multiple surcharges being applied.

Merely days after indicating a resumption of services through the waterway, Maersk declared a re-suspension of services indefinitely following an attack on its 15,000 TEU box ship, Hangzhou, last Saturday. Likewise, Hapag-Lloyd and MSC have confirmed their vessels will continue rerouting via Africa until further notice. 

Shipping lines are not expected to recommence Red Sea transits until operationally feasible and until safe passage is assured. Without a military protection regime ensuring freedom of navigation through the Red Sea, container shipping lines will persist in diverting via the Cape of Good Hope route. This diversion adds approximately 3,500 miles and at least an additional 14 days of transit for cargo bound for Europe and the US. This shift is particularly problematic, especially considering the preference for the Suez routing due to the Panama Canal’s drought conditions.

Longer Term Impact

The next potential challenge will be the extension of container shortages at origin. With containers sitting on vessels for an additional number of days, the likelihood of container shortages escalating in Asia is high. We are already seeing equipment shortages in Ningbo and there is the imminent risk for this scarcity to extend to other ports in China and possibly other regions of origin. The upcoming Chinese New Year should provide a window where some equipment equilibrium may be obtained, but only time will tell whether this becomes achievable.

What is guaranteed is that the ongoing instability will continue to exert upward pressure on freight rates, insurance premiums, leading to additional disruptions and delays across global supply chains over the coming weeks.

Our focus remains on monitoring the ever-changing situation and directing our efforts on minimising impacts for customers. We are working to provide clarity to customers on vessel routings, sailing options and the various surcharges being imposed by the shipping companies.

Should you have any questions or concerns about your shipment, please get in touch with our Customer Service Team on 01376 533039.

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