Shipping companies re-route from the Red Sea amid attacks; freight rates climb
While some container ships are still plying the waterway, others are re-routing to the Cape of Good Hope, which lengthens the Asia-Europe trade route by 7-14 days.
International shipping companies are avoiding the Red Sea route – an East-West trade choke hole following a series of attacks orchestrated by the Houthi militants over the past few days. The development further stretches the global shipping industry amid the ongoing crisis at the Panama Canal.
According to Reuters, at least eleven companies have temporarily suspended shipping via the Red Sea:
- CMA CGM
- Euronav
- Evergreen
- Frontline
- Hapag Lloyd
- HMM
- Moller-Maersk
- Mediterranean Shipping Company (MSC)
- Orient Overseas Container Line (OOCL)
- Wallenius Wilhelmsen
- Yang Ming Marine Transport
While some container ships are still plying the waterway, others are re-routing to the Cape of Good Hope, which lengthens the Asia-Europe trade route by 7-14 days. According to Freightos.com, booking fees for Asia to the Mediterranean surged 44.4% since the beginning of December to $2,414 per 40-footer container. Industry sources believed that freight costs are likely to remain elevated in the near term due to higher insurance premiums and longer routes.
A Chinese trader purchased USA-origin PE cargoes, which was initially scheduled to arrive in January 2024. However, the shipment has been delayed by 2-3 weeks due to the latest shipping issues. Similarly, an Asian petrochemical plant also reported a 14-day delay in their naphtha shipment purchased from a European supplier.