In today’s complex maritime trade landscape, the attacks in the Red Sea, perpetrated by the Houthis, have significantly disrupted trade routes, especially around the Suez Canal. This article will examine the consequences of the attacks and how they are affecting shipping, along with logistical strategies to mitigate the challenges posed.
Challenges to Maritime Trade Routes: Impact of Suez Canal and Red Sea Attacks
The persistence of Houthi attacks has made the Suez Canal a non-viable trade route for commercial vessels. Shipping lines are forced to seek alternatives, avoiding the affected area to ensure the safety of their operations.
The instability in the Red Sea has triggered significant global economic consequences. In the last month, global trade experienced a 1.3% drop, directly attributable to the events in the region. The daily flow of containers on the route plummeted by 66 per cent, from approximately 500,000 units to just 200,000 in just two months, coinciding with the Houthi attacks.
Risks of a Global Transport and Logistics Crisis
The instability in the Red Sea has raised concerns about a potential global logistics and transport crisis. ING’s fear that diversions and tripled container rates will create delays and knock-on effects that could extend into the second quarter is evident. Experts are already talking of a “global contagion” in freight rates, fuelling fears of a spike in international trade inflation.
Price Rises and Logistical Challenges on Affected Routes
Freight rates on the affected route have not only experienced delays, but also a substantial increase in costs. Prices per container have increased from $1,500 to a range of $4,100-4,500, with additional surcharges. Additional reports suggest that the price of a 40-foot container from North Asia to Europe has risen by more than 600%, reaching $6,000 since the start of the Israel-Hamas conflict.
Impact on Reputable Companies and Supply Chain
El impacto ya se está sintiendo en empresas destacadas. Tesla anunció la interrupción de su fábrica en Berlín en varias ocasiones en las próximas semanas debido a la situación. Volvo tomó decisiones similares debido a la escasez de componentes. Grandes cadenas como Ikea, Tesco y M&S reconocen la posibilidad de “retrasos y limitaciones de disponibilidad” en sus productos. La combinación de la inestabilidad en el Mar Rojo y los problemas en el Canal de Panamá debido a la sequía complica aún más el escenario económico global.
Maritime Diversions through Africa: Challenges and Alternatives
Diversion of ships through Africa as a contingency measure brings additional challenges, such as a significant increase in nautical miles, higher fuel costs and estimated delays of 7-14 days. In addition, this diversion has implications for carbon emissions from shipping.
Leading logistics companies, including Hapag-Lloyd and Maersk, have taken the decision to temporarily divert their vessels due to the risks associated with shipping in the region. According to a Hapag-Lloyd representative, they expressed in late December that they considered the current situation too dangerous to transit the Red Sea, opting to divert via the Cape of Good Hope. Maersk has also indicated changes in routing, choosing the Cape of Good Hope route instead of the Suez Canal, resulting in an extension of transit times for cargo transport compared to the previous alternative. This rerouting is estimated to add, on average, 12 additional days to movements between Asia and Europe, according to some estimates.
Future Prospects and Preventive Action
With the current scenario, problems are expected to persist, with potential effects until the second quarter. Preventive measures, such as the logistical alternatives offered by DSV, can play a crucial role in mitigating these impacts. Keeping abreast of developments will be essential to adapt to the new normal in global maritime trade.
Red Sea Attacks: Navigating the Troubled Waters of Seaborne Trade
In conclusion, the current situation in the maritime trade routes presents significant challenges, but with the right strategies and collaboration with logistics partners such as IPSS, companies can adapt to this new normal. Staying informed and seeking flexible solutions will be key to overcoming obstacles and maintaining efficiency in affected supply chains.
At INTPS, we are in constant communication with our transport partners to manage the situation optimally and minimise the impact on your business. We will be vigilant to any changes in the situation and will provide you with updates should changes occur.
