After an increase in attacks by the Iran-backed Houthis, the world's largest shipping firms are staying away from the Red Sea and Suez Canal. Over the past week, most large shipping firms have said they will avoid the Red Sea and, therefore, the Suez Canal. Ships traveling from the Far East to Europe will need to make a detour around the entire African continent via South Africa's Cape of Good Hope. The journey will take more than a week longer and will add about 3,500 nautical miles (6,482 kilometers). According to industry analysts, this step already greatly impacts the cost of shipping goods..
According to Peter Sand, chief analyst at the Copenhagen-based market analytics firm Xeneta, for one round-trip voyage from Shanghai to Rotterdam, this would add a million dollars in fuel costs from rerouting via the Cape of Good Hope.
Also, insurance premiums have soared in response to the attacks, while container shipping lines that run weekly services between Asia and Europe will need to factor in the cost of three extra ships to ensure a similar level of service. The delays in shipping will then have knock-on effects at container ports across Europe, which are usually highly efficient at handling flows of large numbers of containers.
Approximately $35 billion in cargo already diverted
So far, shippers have diverted about more than $30 billion worth of cargo away from the Red Sea. At the moment, there are 57 container vessels sailing the long way around Africa instead of cutting through the Red Sea and the Suez Canal, and this number is expected to increase.
Naval security stepped up
On Tuesday, the United States announced a multi-nation operation to safeguard maritime commerce in the Red Sea. Defense Secretary Lloyd Austin announced the formation of an international task force to address security issues. As part of the measure, Britain, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles and Spain will stage joint patrols in the southern Red Sea and the Gulf of Aden.
US and British warships in the area have begun shooting down Houthi missiles and drones. However, it is unclear whether the presence of a larger naval force will be enough to halt the attacks altogether.
Source: dw.com