Crisis of the Red Sea -Container ship bypasses Suez Canal

Major shipping operators have suspended container traffic through the Suez Canal after Yemen's Houthi movement carried out multiple rocket attacks on Red Sea ships.

Paralysis of the Red Sea

More than two dozen attacks involving ships have been reported, most of them in the Bab el-Mandeb Strait, the border between the Arabian Peninsula and Africa.

Container ships such as the Maersk Gibraltar, Al Jasrah, Hapag-Lloyd and MSC Palatium III were all attacked.

In response to the attacks, MSC, Maersk, CMA CGM and Hapag-Lloyd decided to reroute container ships from the Suez Canal. This means that about 70% of container traffic in the Suez Canal has been suspended.

Alternative routes for container ships around Suez Canal

Due to the high security risks in the Suez Canal, shipowners have been forced to choose alternative routes for their ships.

According to statements from the four companies, their container ships will take a longer but safer route around the Cape of Good Hope.

The new route could take 40% longer than the Suez Canal. This situation is bound to lead to delays in cargo delivery, and both shipowners and importers must be prepared.

Below is a comparison of the length of the route through the Suez Canal to the length of the route around the Cape of Good Hope as an example.

The MSC said the delay would only last a few days. But in reality, they can be as long as ten days or so, and steadily increasing.

Consequences of the Suez Canal Blockade

The Suez Canal is a strategic waterway connecting the Mediterranean Sea and the Red Sea and plays an important role in global maritime transportation.

Its geographical location shortens transportation routes by thousands of kilometers compared to other routes, thus saving a lot of time and transportation costs.

The Suez Canal handles approximately 12% of world trade each year, transporting more than 50 billion tons of cargo.

Therefore, the blockade of the Suez Canal is not only related to the above-mentioned delays, but also to the increase in the cost of organizing maritime transport.

Importers must be prepared to compromise between on-time delivery and higher shipping costs.

It will lead to serious disruptions in supply chains as well as end service systems.

Recently, affected by the Red Sea crisis, merchant ships from more than 10 major shipping companies around the world have avoided the Red Sea-Suez Canal and detoured to the Cape of Good Hope in Africa.

This has triggered concerns among companies about the safe delivery of goods. In order to ensure that goods can be delivered safely and on time, some companies have begun to use bypass, air transport, and combined sea and air transportation methods.

This change has brought new challenges to global logistics, which requires dealing with the risk of rising sea and air freight prices.

Quotations have been obtained for January, with the freight rate from China to the UK reaching US$10,000 per 40 feet. It's surprising that a supply chain crisis would return in this way three years after the pandemic began.

It is also an indisputable fact that freight rates on European routes and Red Sea routes have increased several times. Alan Baer, CEO of logistics giant OL USA, pointed out that because ships need to turn in real time to avoid the risk of attacks by Houthi armed forces in Yemen, ocean carriers have made rapid adjustments A quote was requested to cover the increased cost.

Compared with the changes during the epidemic, this time the adjustment is faster, and on some trade routes, freight rates have even increased by 100% to 300%.

According to data released by Kuehne + Nagel, as of Friday (December 22), 313 ships have been identified as being affected by the situation in the Red Sea. Total capacity is expected to be 4.2 million TEU.

Maritime transport data company MDS Transmodal estimates the value of rerouted cargo at around $105 billion.

U.S. shippers are also evaluating trans-Pacific shipping options and even looking at the Panama Canal as an alternative trade route. They are carefully analyzing the time and cost of these options to find the most suitable shipping method.

Although the pressure on transportation costs is inevitably passed on to consumers in the supply chain, whether it is air freight or detours, the cost will further increase.

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This release was published on openPR.