Global Trade Disrupts As Half Of Containerships Divert From Red Sea Amidst Security Concerns

According to recent industry data, the possibility of attacks has caused fifty per cent of the container vessel fleet that usually travels the Red Sea as well as the Suez Canal to shun the route. Following a count made by Flexport Inc., 299 ships with a combined capacity of 4.3 million containers have either shifted their intended course or intend to do so. That is roughly 18% of the world’s capacity and is roughly twice as many as it was a week ago. Per Flexport, travelling around Africa on an alternate route can take up to 25% longer than travelling between Europe and Asia via the Suez Canal.

These lengthier trips are more expensive, and if they continue, customers may pay more for food, oil, sneakers, and other necessities. These longer journeys are more expensive and could result in increased pricing for customers on a variety of goods and services, including food, oil, and sneakers.

Suez Canal
Image for representation purpose only

Among the few who are defying the trend is Maersk, based in Denmark. A Reuters assessment of the group’s timetable on Thursday revealed that it is getting ready to transport nearly all container vessels travelling between Asia and Europe via the Suez Canal going forward, diverting only a small number across Africa. With reference to the deployment of a US-led military campaign to safeguard vessels, Maersk announced on December 24 that it was getting ready to return to the Red Sea. On Wednesday, the company posted schedules indicating that vessels will be sailing to Suez in the upcoming weeks.

A thorough analysis revealed that, despite the fact that Maersk had rerouted 26 of its own vessels around the Cape of Good Hope in the previous 10 or so days, only five more were set to begin the same voyage. The Houthis, who are based in Yemen, claim to be attacking Israeli-affiliated ships that are aiding the Palestinian cause in the Red Sea. However, ships with no clear connection to Israel have also been targeted, and a task force commanded by the US is attempting to increase security on the vital waterway as the war’s expansion threatens world trade.

While they continue to use the route, some ships are attempting to declare their neutrality. Three ships are now navigating the waterway: one oil tanker, two cargo ships, and one other. Based on ship monitoring information gathered by Bloomberg and TankerTrackers.com, the tankers are indicating that they have not had any communication with Israel. Prior to this, all three had called at Russia. The pattern in Flexport’s figures is consistent with a different count conducted on Wednesday by the Swiss Kuehne + Nagel International, which revealed that 364 vessels capable of holding 5 million 20-foot container units were being diverted throughout Africa. This is in contrast to 314 vessels on December 22.

Following more than 100 strikes on commercial ships by the Houthis in the last month, the numbers illustrate the extent of the growing disturbance to the marine environment. On Tuesday, while the container vessel MSC United VIII was travelling from Saudi Arabia to Pakistan, it was attacked. Per Flexport’s examination of Alphaliner data as of Wednesday, fifteen container vessels — ten of which are managed by Maersk — have either continued on course or just abandoned diversion plans with the goal of passing into the Red Sea toward Suez. Hapag-Lloyd, however, declared that it would continue to keep its ships out of the region even after the US-led task force was established to guard the vital commerce route against terrorist strikes.

Arrivals in the Gulf of Aden fell 40% between December 22 and December 26, compared to the average for the initial half of the month, per data provided on Thursday by Clarksons Research. Arrivals of car carriers decreased by 25%, gas tankers by 30%, and container ships by 87%.

Similar results were seen for Suez Canal transits, which, per Clarksons, decreased by almost 45% for vessels travelling south between December 22 and December 26. Companies whose cargo is on deflecting ships are clambering to keep track of the updated arrival times. Per Flexport CEO Ryan Petersen, it is occurring widely on every ship that was diverted. This was stated last week. Now, teams are putting in extra hours to attempt to stay up with this.

Reference: BangkokPost

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