Half of the container-ship fleet that regularly transits the Red Sea and Suez Canal is avoiding the route now because of the threat of attacks, according to new industry data.
The tally compiled by Flexport Inc. shows 299 vessels with a combined capacity to carry 4.3 million containers have either changed course or plan to. That’s about double the number from a week ago and equates to about 18% of global capacity.
The diverted journeys around Africa can take as much as 25% longer than using the Suez Canal shortcut between Asia and Europe, according to Flexport. Those trips are more costly and may lead to higher prices for consumers on everything from sneakers to food to oil if the longer journeys persist.
The attacks in the Red Sea are being carried out by Yemen-based Houthis, who say they’re targeting ships linked to Israel in support of the Palestinians. But ships without direct links to Israel also have been targeted, and as the escalation of the war threatens global trade, a US-led task force is trying to bolster security on the key waterway.
Some ships are trying to broadcast their neutrality as they continue using the route. Three vessels — two container ships and an oil tanker — are currently traversing the waterway and signaling they had no contact with Israel, according to TankerTrackers.com Inc. and ship tracking data compiled by Bloomberg. All three previously called at Russia.
The trend in Flexport’s numbers mirrors a separate count by Swiss freight-forwarder Kuehne + Nagel International AG that, as of Wednesday, showed 364 vessels with capacity for 5 million, 20-foot-container units being rerouted around Africa. That compares with 314 vessels on Dec. 22.
The figures show the scale of the mounting maritime disruption after Houthis launched more than 100 attacks on commercial ships in the past month. The MSC United VIII container ship was targeted Tuesday while en route to Pakistan from Saudi Arabia.
Fifteen container vessels — 10 of them operated by A.P. Moller-Maersk A/S — have either stayed on course or recently abandoned diversion plans in order to cross into the Red Sea toward Suez, according to Flexport’s analysis of Alphaliner data as of Wednesday.
Maersk, the world’s No. 2 container line, said it’s preparing to resume Red Sea transits “as soon as operationally possible.” Hapag-Lloyd AG said it will keep its vessels away from the area even after the launch of a US-led task force to protect the key trade route from militant attacks.
According to Clarksons Research data released Thursday, arrivals into the Gulf of Aden declined 40% between Dec. 22 and Dec. 26, compared with the average for the first half of the month.
Container ship arrivals were down 87%, gas tankers about 30% and car carriers about 25%.
It’s a similar picture for Suez Canal transits, which were down about 45% between Dec. 22 and Dec. 26 for vessels heading south, according to Clarksons.
The diversions around the southern tip of Africa are stretching shipping capacity and boosting freight rates. Between the Suez diversions and a drought that’s limiting maritime traffic through the Panama Canal, the worst-case scenario is a 20% reduction in global capacity, Flexport said.
Bloomberg Economics says although the US and its partners have successfully intercepted a large share of these attacks, such a defensive strategy is expensive and the risks are still sending shipping insurance higher.
“While the US-led coalition might appear successful militarily, it might not be sufficient for major shipping companies to resume Red Sea transits,” said Gerard DiPippo, senior geo-economic analyst with Bloomberg Economics. “The longer the Houthi attacks continue, the more pressure the US will face to go on the offensive, which risks regional escalation.”
For companies that have cargo on detouring ships, the clamber to track new arrival times is underway.
“That’s happening en masse on every ship that got diverted,” Flexport founder and CEO Ryan Petersen said in an interview with Bloomberg TV last week. “Teams are working overtime right now to try to keep up with this.”
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