Container Ships In Red Sea All But Disappear As Key Trade Route Freezes
Major shipping companies are rerouting vessels from the Red Sea to the Cape of Good Hope to avoid Houthi drone and missile attacks. New shipping data indicates a significant decrease in commercial vessel activity on the critical global trade corridor connecting to the Suez Canal, responsible for 12% of international trade and almost one-third of global container traffic.
Bloomberg data shows only a handful of container ships with destinations in Europe or Asia are sailing through the once-busy Red Sea. These vessels are being rerouted around the Cape of Good Hope.
New data from Clarkson Research Services Ltd. shows an 82% plunge in the gross tonnage of container ships arriving in the Gulf of Aden in the last four days, compared with the first half of December, according to Bloomberg.
On Wednesday, logistics company Kuehne + Nagel International AG reported at least 100 container ships were rerouted around the Cape of Good Hope. That number is likely higher at the end of the week.
Every containership over 8,000TEUs, except for one, have turned from the Bab el-Mandeb.
— Sal Mercogliano (WGOW Shipping) 🚢⚓🐪🚒🏴☠️ (@mercoglianos) December 20, 2023
This means that all the major ocean container lines have abandoned the region even after the @DeptofDefense and @CENTCOM have announced Op Prosperity Guardian. pic.twitter.com/kHNMPwx6fP
Seven major shipping companies, including Taiwanese container shipping line Evergreen and Belgian tanker owner Euronav, halted all sails through the Red Sea earlier this week.
Red Sea is now largely closed to traffic. That's 8.8 million bpd of daily oil transit, and nearly 380 million tons of daily cargo transit.
— zerohedge (@zerohedge) December 18, 2023
Global traffic now will be rerouted around Cape of Good Hope, adding 40% to voyage distance (and even more to cost) pic.twitter.com/Xct7x03tFI
While traders have been focused on rising Brent prices due to regional instability, CNBC learned this week that logistics managers were quoted $10,000 per 40-foot container from Shanghai to the UK. Just last week, the same rates were about $2,400.
Extended travel times due to the 1 to 2-week detour have sparked supply chain chaos from retailer IKEA.
"What we can share for now is that the situation in the Suez Canal will result in delays and may cause availability constraints for certain IKEA products.
"This is our main priority. In the meantime, we are evaluating other supply options to secure the availability of our products, and we continue to monitor the situation closely going forward," said an IKEA spokesman.
Meanwhile, the US and its allies are trying to restore order in the major maritime shipping lane via Operation Prosperity Guardian.
Comments from the White House on Friday afternoon show things are heating up:
- WHITE HOUSE ALLEGES IRAN WAS 'DEEPLY INVOLVED' IN PLANNING OPERATIONS AGAINST COMMERCIAL VESSELS IN THE RED SEA
The Red Sea appears to be entering a deep freeze. This could only mean global supply chain snarls will reemerge near term.
