Red Sea shipping diversions could continue until mid-2024, consultancy warns
Container ships are unlikely to resume voyages through the Suez Canal in the Red Sea for at least the first six months of this year amid the ongoing tensions, according to Drewry.
Major carriers will only return to the key trade waterway when the risk of attacks on commercial vessels has subsided, the maritime consultancy said.
Companies appear to be working on resuming journeys through the Suez Canal within this year, although the duration of the Red Sea shipping crisis is difficult to predict, the London-based consultancy said, citing polls and discussions with its clients.
“The consensus view is that it will be within months, rather than the full-year, and certainly not within weeks,” said Simon Heaney, senior manager at Drewry’s container research unit.
Many vessels are avoiding the Red Sea because of attacks by the Houthi fighters on merchant shipping, opting to sail the longer route around South Africa’s Cape of Good Hope.
The number of container ship transits through the Suez Canal in the first three weeks of this year was down 74 per cent on an annual basis, according to Drewry data. Meanwhile, transits at the Cape of Good Hope have jumped 218 per cent during the period.
Spot rates for transporting a 40ft container from Asia to Europe through the Suez Canal have surged more than 300 per cent since the attacks began in November, according to Drewry. Shipping companies are collecting surcharges of up to $2,500 per container to reroute ships, the consultancy said.
Rerouting vessels through the Cape of Good Hope is creating supply chain problems and delays for shippers. Estimated journey times from Asia to key destinations in Northern Europe have risen to 40 days, up 32 per cent compared with the Suez Canal transits, according to Drewry.
There will be 34 cancelled sailings on the Asia-Europe trade route in the next five weeks, out of the 145 scheduled trips, Philip Damas, Drewry’s managing director, said. But there are indications that the elevated spot rates from Asia to Europe are softening, he added.
If the Suez Canal diversions end by the second quarter of this year, then the average eastwest shipping rates could fall by more than 10 per cent in 2024 compared to 2023, he said.