Red Sea Troubles
Suez Canal Notice 15.01.24
Ships passing through this vital waterway are facing attacks, leading shipping companies to take longer routes to avoid danger. This rerouting not only extends travel times but also adds extra costs to the transportation of goods.
Recent clashes involving Yemen-base Houthi rebels have turned the Red Sea into an are of immediate concern for global trade.
With these events in the Red Sea and the necessity to reroute vessels to/from Europe through the Cape of Good Hope, OOCL has introduced an Emergency Surcharge , COSCO Shipping Lines has introduced a new Carbon Emission Trading System (ETS) surcharge effective 1 January 2024, in order to compensate for the rising cost of fuel.
Other shipping lines have also followed as has CMA CGM as of 20/12/2023 floating cargo date (see table below).
Australia, heavily dependent on imports, particularly from Europe, is at risk of experiencing price hikes for various products due to these challenges.
The development of the conflict in the Red Sea will determine how long global trade will be further affected. The next week will be critical.
James Hookham, Director of Global Shippers Forum has stated:
- It is now expected vessels will reroute away from the Red Sea and Suez Canal
- It is a rule rather than exception that vessels will reroute via the Cape of Good Hope until further notice
- Importers should expect a one-off adjustment to schedules over the next few weeks to the longer routes and adjusted port calls
- This also applies to east-bound sailings, possibly effecting empty containers in Asia in the interim
- Rates will increase due to fuel costs, additional crew, insurance and chartering costs, offset only by the savings of not going through the Suez Canal
- Red Sea is closed to all shipping, but with no effect on global demand which is stable, AS CMA CGM will be as of 20/12/2023 floating cargo date