The major shipping companies are temporarily abandoning the Suez Canal route due to armed attacks in the Gulf of Aden. This is leading to higher costs, prices and transit times.
The facts
The Houthis, Yemeni rebels backed by Iran, have carried out multiple drone and missile attacks since November, targeting merchant ships in particular, including container ships. In response to these attacks, the world's major shipping companies decided to change the routes of the regular lines concerned, bypassing Africa via the Cape of Good Hope to avoid the Red Sea and the Suez Canal. Maersk was the first to make this announcement on 15 December, quickly followed by Hapag Lloyd and then MSC, CMA CGM, OOCL, HMM and Evergreen.
Given the way in which services operate within shipping alliances, it is reasonable to deduce that the other member companies are in agreement with these decisions, as each vessel carries containers of the others within the same alliance.
The consequences
According to Jérôme de Ricqlès, maritime expert at Upply, "This new situation is leading to longer lead times and is having an inflationary effect on operating costs and freight rates."
- Delivery times
The average transit time between China and Western Europe on a door-to-door basis is around 90 days via the Cape of Good Hope, around 30% longer than via the Suez Canal.
- Freight rates
Freight rates between Asia and Western Europe had fallen to around $1,500/40' at the beginning of December. "Longer sea routes will lead to increased fuel consumption, which should be reflected in freight rates, pushing them back up to around $2,500-$3,000/40’," says Jérôme de Ricqlès.
- Alternatives to be studied
The rise in ocean freight prices and longer lead times may make alternative modes of transport more relevant again, whether by Asia-Europe rail freight or Sea-Air combined transport, via hubs such as Dubai. "The price differential compared with an all-sea option remains significant, but for deliveries of highly time-sensitive shipments, these solutions will be worth considering if the situation continues," concludes Jérôme de Ricqlès.
