Their actions have forced major shipping companies, including Danish shipping giant Maersk, Chinese state-owned shipping company Cosco and energy giant BP, to suspend access to the Suez Canal and Red Sea routes.
Known as the factory of the world, China produces large quantities of goods for export before factories close for annual holidays. However, many ships are expected to be unable to reach Chinese ports in time as ships are temporarily halted or detoured around the Cape of Good Hope.
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Yemen’s Houthi fighters behind Red Sea attack threatens to disrupt global trade
Yemen’s Houthi fighters behind Red Sea attack threatens to disrupt global trade
The Suez Canal provides the shortest shipping route between Europe and Asia. It is one of the world’s busiest waterways, accounting for 12% of global trade, including 30% of all container movements, according to Egypt’s National Intelligence Service.
Rico Luman, senior economist specializing in transportation, logistics and automotive industries at ING Research, said the current detours and longer travel times will lead to further port issues in January and February, which will in turn impact supply chains. He said he would give it.
“If a solution to the security threat is found, things may only start to normalize after the Lunar New Year,” Luman said.
Delays caused by the shipping crisis will cause major problems at ports, said Marco Forgione, director of the Institute for Export and International Trade, an association of exporters and importers.
“Ports will experience congestion…all of which will create a cascading multiplier effect of disruption,” Forgione said.
Forgione said there has been a significant increase in requests for information about railroads. It reaches his 217 cities in 25 countries in Europe via more than 100 cities in 11 countries and regions in Asia.
“Rail to Europe is a viable alternative and we are seeing increasing demand for that route. Rail is more viable for containerized traffic,” Forgione said.
“It is predicted that the use of rail as an alternative to sea transport could further double in the coming weeks.”
But Luhmann disagreed that the situation in the Red Sea would have such a big impact on rail connections.
“Shippers who are at risk of missing upcoming important and expensive deliveries will turn to air freight instead,” Luhmann said.
“It is also still an issue for many Western shippers that trains usually pass through Russia, so the most popular route now is across the Caspian Sea, which takes longer than before.” he said.
Tommy Tan, president of Shanghai EPU Supply Chain Management Company, told China’s state-run newspaper Global Times: [about the China-Europe Railway Express] These incidents have doubled since they began. We are actively preparing our route configuration and increasing the capacity of our round-trip services to meet growing customer demand. ”
Sending cargo by rail is more expensive than by sea, but the train journey from China to Europe takes about 12 days, compared to 35 to 45 days for regular sea transport.
US, allies warn Houthis as Red Sea attack shakes up global commerce
US, allies warn Houthis as Red Sea attack shakes up global commerce
But as exporters look to alternative routes and modes of transportation, the move will also change who bears the additional costs and who loses revenue.
Jensen said, as a rough benchmark, avoiding the Red Sea would add about US$2 million to the ship’s journey in terms of fuel and other costs. This means a complete round trip between Asia and Europe could cost each vessel an additional US$4 million, he said.
Christian Roeloffs, co-founder and CEO of Container xChange, an online platform for container logistics, said freight rates through the Red Sea have already increased by 20-30%. Similarly, average container prices have also increased, he said.
“In terms of average container prices, we see week-on-week increases across the ports of Tianjin, Shenzhen, Shanghai, Ningbo and Huangpu,” Roelofs said. “If we zoom in on individual locations in China, particularly Shanghai, Tianjin and Ningbo, we see that the average price for a 40-foot-tall cubic container has steadily increased,” he said, adding that this is primarily due to He added that it depends on the situation. Red Sea.