Crossing the Red Sea these days exposes you to very high risks that few are willing to take. And little by little the big companies are withdrawing, even though this is the shortest trade route between Asia, the Middle East and Europe. Another container giant, Taiwanese firm Evergreen, has suspended operations in the region and also announced that it would stop accepting Israeli cargo “effective immediately.”
Many other big names in the sea – including MSC, Maersk, Cma, Hapag-Lloyd, which together control more than half of the world's container transport capacity – had already announced the stop of transits in the Red Sea in the days before: a drastic decision that also entails the refusal to enter the Mediterranean via the Suez shortcut, a passage that is considered safe, at least for the time being.
The impact on the Panama Canal is already in trouble
The authority that manages the Egyptian canal – through which in normal times almost a third of the world's containers traded by sea passes – announced over the weekend that since November 19, the day of the first Houthi attack in the Red Sea, 55 ships have changed their route, preferring to circumnavigate Africa, while another 2,128 passed through Suez without any problems. However, looking forward, it is expected that diversions will occur much more frequently, which will have a significant impact on cargo logistics, exacerbated by the current difficulties that have hampered shipping in the Panama Canal for months.
In Central America, the cause of the problems lies in the drought, which has almost halved the capacity of the canal and has increased passage times and costs exorbitantly: in this case too, many ships have changed their route and are often heading towards the Cape of Nuova Speranza on the way – to the very southern tip of Africa – and then on towards the Red Sea and Suez. A path that will lead to reflection at this point.
The logistical and economic effects cannot yet be precisely quantified. But an increase in freight rates seems unlikely to be avoided. Some warning signs are already shining on the spot market: The Freightos index for container ships heading to the Mediterranean from China and Southeast Asia rose 12% last week and 62% last month, reaching $2,413 per 40-foot container (FEU) Friday, 15.