Archives



Freight News, Sea


Attacks throw Suez shipping into chaos – updated

[ December 18, 2023   //   ]

Maritime traffic through the Suez Canal has been thrown into chaos following a number of attacks on container vessels and other ships, with leading operators saying that they were halting operations though the region, which leads to the Suez Canal.

Houthi rebels in Yemen have launched land-based missile attacks on ships and had earlier hijacked a car carrying vessel which remains in Yemen. The pro-Palestinian rebels say that they are targeting ships trading with Israel following that country’s incursions into Gaza. While none of the ships attacked were en route to or from Israel, which is largely served by independent feeder routes rather than deepsea vessels, it is possible that the rebels are attacking ships that have some Israeli ownership. Another possibility is that the attacks are in fact indiscriminate and any vessel likely to be carry goods between the Far East and Europe is vulnerable.

Over the weekend of 16-17 December, Maersk and Hapag Lloyd said they were both halting traffic through the area, followed by  MSC, Evergreen and CMA CGM. The latter said it had instructed all its containerships in the area scheduled to pass through the Red Sea to reach safe areas and pause their journey in safe waters with immediate effect until further notice. The French-headquartered line said it was “deeply concerned” about the recent attacks on commercial vessels unfolding in the region and that the situation is deteriorating further.

So far, most operators have opted to ‘pause’ vessels rather than reroute them via the Cape of Good Hope in Southern Africa, although a there was at least one unfirmed report of a ship being diverted. Rerouting would be costly and could add several weeks if not months to voyages. An alternative would be to organize armed naval escorts through the region. While this could lead to delays while ships are organized into convoys, it could be less disruptive than routing via the Cape of Good Hope.

Fortunately, for the trade, the escalation in attacks has occurred after the pre-Christmas peak and has occurred at a time when trade volumes are likely to be relatively low. However, if the issue continues for any length of time, it could impact on global trade volumes and rates, in much the same manner as the Ever Given grounding in the Suez Canal in March 2021.

Judah Levine, head of research at data company, Freightos saidon 18 September that the US was setting up an international task force to restore security to the waterway, but in the meantime global freight can expect to see rate increases, rerouting and longer transit times. 

The route around Africa adds about 7,000 nautical miles and 10-14 days to voyages compared with Suez, although it does avoid canal fees of $400-700,000 and which are set to increase by 15% in January 2024. For Asia to North America East Coast, the diversion is only about 2,000nm and seven days longer.

ZIM Lines, Hapag-Lloyd and Maersk are now all charging a war risk surcharge of between $20 and $100 per container. 

Past experience of the Somali pirate attacks in the Red Sea between 2010 and 2018 led to coordinated international naval operations and did manage to restore security to the trade lane, Levine added. 

The Ever Given incident in 2021 also happened at a time when port congestion was already serious and rates were already 4.5 times their norm due to pandemic-driven increases in ocean freight, the blockage making a bad situation worse but was not the overall driver of high rates and delays.

This time, Levine said, there is a record level of excess capacity so while  shippers can expect longer voyages, operations should continue reasonably well. Freight rates will likely increase, but with carriers looking for ways to utilize excess capacity, it is unlikely that they will spike to pandemic levels.

Cargo visibility specialist project44 said that transit times can be expected to increase by a minimum of 7-10 days on routes that usually use the Suez Canal

Tags: