Source: AFP
International maritime trade has hit stormy waters as attacks by Yemen’s Houthi rebels on ships in the Red Sea have reduced vessel availability, causing freight rates to rise.
Most major international shipping companies have decided to reroute trade to avoid the Red Sea and Suez Canal through which 12 percent of world trade typically passes.
The Houthis say the strikes are in solidarity with Palestinians in war-torn Gaza, which Israel has been bombing relentlessly for three months in a campaign they say is to destroy the militant group Hamas.
Danish shipping giant Maersk said on Friday it would divert all ships across Africa instead of using the Red Sea and Suez Canal for the “foreseeable future” after Yemeni rebels attacked its merchant ships.
Ships circumnavigate Africa via the Cape of Good Hope, which extends the journey between Asia and Europe by 10 to 20 days on average, according to Arthur Barillas, general manager of Ovrsea, a charter operator.
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Shipping companies have already announced significant price increases to cover the costs associated with the bypass.
French shipping group CMA CGM doubled the price of a 40-foot container between Asia and the Mediterranean to $6,000.
Italian-Swiss peer and industry leader MSC raised its prices to $5,900 from $2,900 for the same offering.
The United States says there have been more than 20 attacks in the Red Sea by Houthi rebels since October 19.
Chinese New Year
The industry is suffering from a shortage of containers in Asia due to longer travel times, causing a headache ahead of next month’s Chinese New Year.
“There is a real inflow (of goods) from Asia,” Barillas said.
In the run-up to Chinese New Year on February 10, “all ships are full”, causing fares to rise, he added.
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Customers are rushing to ship their goods before the holidays bring China, the world’s biggest exporter, to a standstill for a week.
A benchmark to measure the freight rate of goods shipped from China — the Shanghai Container Index — has nearly doubled in a matter of weeks.
Such a sudden increase is reminiscent of what happened during the Covid pandemic, when fares reached unprecedented heights due to disruptions in supply chains.
“A lot of people are focusing on the spot price. And yes, it has doubled. And, of course, it speaks to how desperate the situation is,” Niels Rasmussen, chief shipping analyst at BIMCO, told AFP.
He added, however, that some charterers would have negotiated better deals.
“If you look at the average rate for anything outside of China through most of Europe and the Mediterranean, the increase is 15% to 20%,” Rasmussen said.
Elections in Taiwan
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Attacks in the Red Sea are not the only ones disrupting international trade. The worst drought in decades to hit the Panama Canal has forced authorities to slow down crossings.
A possible further risk could be the outcome of Taiwan’s January 13 presidential election, if it leads to a new crisis with China, analysts said.
However, “even with the threat of some congestion and equipment shortages, carriers are in a much better position to operationally service these diversions compared to the disruptions seen during the pandemic,” the Israeli freight booking and payment platform said , Freightos, in a weekly paper. note to customers.
Shipping companies have recently used huge profits to order hundreds of new ships that are starting to be delivered.
Source: AFP
Source: AFP