Ships linked to Israel are said to be targeted by Yemeni rebels, but over the past month there has also been an increase in missile, drone or pirate attacks against merchant ships. Major shipping companies MSC, Maersk, CMA CGM Group, Hapag-Lloyd and British oil giant BP have announced that they will no longer transit the Red Sea.
The attacks target the transportation of oil, liquefied natural gas and other energy, food and much of the world’s industrial products. “This is a problem for both Europe and Asia,” said John Stawpert, head of environment and trade at the International Chamber of Maritime Transport. He added that 40% of trade between Asia and Europe usually takes place via water. “It has the potential to have a huge economic impact,” he said.
Analysts say Greece, Jordan, Sri Lanka and Bulgaria will be hit hardest by the trade disruptions. Companies that decide to change route have to go around Africa to reach Europe, causing an estimated delay of between seven and 10 days.
“Longer transit times, higher fuel consumption, more ships needed, potential disruptions and delays, at least on first arrivals in Europe,” listed the potential impacts Simon Heaney, senior manager of container research at the shipping company marine research consultancy Drewry. According to Stawpert, consumers can expect some price increases in the short term, but it depends on how long the security threat lasts.
The attacks disrupted an important trade route linking Europe and North America to Asia via the Suez Canal. It has also caused container shipping costs to skyrocket as companies seek to transport their goods via alternative, often longer routes.
Traffic through the narrow Bab al-Mandab Strait, which connects the Red Sea and the Gulf of Aden, fell 14% from December 15 to 19, 14% compared to December, according to MarineTraffic data.
Shipments have been suspended
Container shipping companies have suspended their shipments through the Red Sea, instead using the route around Africa, which adds several days to travel time and increases costs. That has raised concerns about supply delays and price increases that could trigger another global explosion of inflation.
“We will continue to reroute all scheduled ships until December 31. Then we will reassess the situation and make a decision,” a spokesperson for Germany’s Hapag Lloyd said.
Another shipping industry source said some shipowners have canceled cargo contracts across the Red Sea citing “unsafe shipping” or are demanding a risk premium on top of compensation for increased war risk insurance coverage.
IKEA warns of delivery delays
IKEA was one of the first to warn that products could be delayed.
“The situation in the Suez Canal is causing delays and may affect the availability of some IKEA products,” an IKEA spokesperson said. “We are in close contact with our transport partners to ensure the safety of people working in the IKEA value chain and take all necessary precautions to ensure it. This is our top priority,” he confirmed, adding that they are taking into Also consider other delivery options to ensure product availability.
Project 44, a supply chain research firm, said avoiding the Suez Canal would add up to 10 days to shipping times and that goods could be off shelves by February.
Andres Valgerist, chairman of the board of directors of the Estonian Logistics and Transit Association, said it is not yet clear whether the situation at sea will affect Estonian logistics. This was confirmed by Riia Sillave, head of HHLA TK Estonia. “Obstacles to container ship traffic in the Red Sea are expected to have no impact on supplies in the Baltic Sea region. Goods arrive in Estonia via major European terminals, during transhipment power supply-ships, the effect of delays will largely dissipate,” he explained.
“In the current situation, where the price level of container transport is extremely low and the volume is small, there is no bottleneck in ship traffic and there is no serious risk of this happening,” he added.
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2023-12-21 17:04:00
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