The recent spate of attacks on the merchant fleet in the Red Sea continues to impact shipping traffic in the area. Last Thursday, air strikes on January 11th by US and UK fighter planes on targets in Yemen from where Houthi militants have launched attacks on commercial shipping since early December. This highlights that this conflict will continue to escalate and the shipping impact will be sustained over the course of 2024.
The number of container ships at the mouth of the Red Sea on their way to or from the Suez Canal was 90% lower in the first week of January than it was in the same period last year, reports the Financial Times. According to research firm Linerlytica, 354 ships have been diverted south of Africa since Dec. 15, which corresponds to 80% of all ships sailing between the Atlantic, Mediterranean and Indian Ocean. Only CMA CGM and a small number of niche carriers operating in the markets between Asia and the Eastern Mediterranean and the Baltics have continued to transit the Suez Canal.
Ocean carriers have stopped, for now, offering long-term agreements to the Asia-Europe market because of this disruption, making it impossible to assess the factors to determine a fixed contract level. With the sudden increase in transit times and the coming of the long Lunar New Year holidays, space and equipment continue to be problematic. GRIs, Space Guarantee premiums, and other “Red-Sea Linked” surcharges have started to be implemented since January 1st, 2024. Despite the willingness for shippers and consignees to pay for these, there is no guarantee of securing cargo with consistent service. As a result, certain factories (including Tesla’s plant in Germany and Volvo factory in Belgium) have temporarily closed because of the lack of components. The situation continues to be fluid as the Canaan Team continues to monitor the situation.
For more information, contact Canaan Group’s sales team.