Clothing, food, computers and many of the products that consumers usually buy in stores are taking longer days to reach their destination amid the security crisis in the Red Sea.
Attacks by Yemen’s Houthi rebels on merchant ships heading to the Suez Canal through the Red Sea have forced shipping companies to take a much longer and more expensive alternative shipping route through southern Africa, causing delays. in deliveries.
Since mid-December the attacks, whose objective according to the rebel group is to punish Israel for the war in Gazahave intensified.
On Tuesday, the US and UK militaries announced they repelled “the largest attack” to date by Houthi rebels after shooting down 18 drones, two cruise missiles and one ballistic missile.
And this Wednesday, the UN Security Council approved a resolution demanding an immediate end to attacks against merchant ships in the Red Sea, which includes a mention of the right of UN member countries to defend those ships. of the attacks.
The Yemeni militia argues that they are attacking ships traveling to Israel, using drones and rockets, although it is not clear if all the ships attacked are heading to Israeli territory.
S&P Global Market Intelligence has documented more than 20 confirmed incidents starting November 19 against commercial vessels.
Shipping companies including Maersk, Hapag-Lloyd and Mediterranean Shipping Company (MSC) have taken alternative routes to transport their containers, amid the biggest maritime emergency of its kind since a ship stuck in the Suez Canal paralyzed much of global trade in 2021.
Companies such as Ikea, Walmart or Amazon have experienced delays in the arrival of some products, Reuters reported, while the rise in the cost of freight transportation is one of the main effects of the crisis.
Increase in the cost of maritime transportation
“In recent days we have seen dramatic increases in the costs of shipping containers on several critical trade routes,” Willy Shih, professor at Harvard Business School, tells BBC Mundo.
The price of moving a container from East Asia to Northern Europe increased by 199% in recent weeksaccording to data from Freightos, an international freight and market analysis company.
Although the Shanghai-Rotterdam sea route has been one of the most affected, the routes that link Shanghai with Genoa, Los Angeles and New York have also suffered the consequences of the crisis in the Red Sea.
And the Red Sea is one of the most important roads in the world for the transportation of consumer goods, oil and liquefied natural gas.
The issue is even more challenging for maritime transport. “We have two crises simultaneously” that are affecting shipping routes, Shih points out.
One is the Red Sea crisis and the other is the lack of water in the Panama Canal.
In that context, any major disruption can upset the delicate balance of shipping.
How significant will the economic impact of red sea route diversion be?
Simon Heaney, senior manager in the Container Research area of the Drewry company, tells BBC Mundo that “the economic consequences of the attacks on commercial ships in the Red Sea depend on their duration.”
These types of situations “can significantly affect global supply chains and take weeks or months to recover,” argues Heaney, just as a time of crisis comes in the coming weeks. high commercial flow with the arrival of the Chinese New Year on February 10.
And it is likely, says the expert, that there will be a certain level of congestion in ports due to delays in the flow of vessels.
Something positive in the midst of everything that is happening is that, so far, the impact on the energy sector “has not materialized,” says the expert and argues that “there are reasons to believe that maritime transport has more than enough capacity.” to face the challenge.
And despite the difficulties, analysts such as Peter Sand, from the freight rate data company Xeneta, maintain that “shipping companies are in a much better position to deal with a crisis” than when the enormous ship Ever Given blocked the Canal. Suez in 2021.
What is seen on the horizon
Jack Kennedy, associate director and head of global country risk intelligence and analysis for the Middle East and North Africa at S&P Global Market Intelligence, argues that “Houthi attacks are likely to continue targeting international vessels regardless of their public connection to Israel.”
Despite the Houthis’ claims that the attacks on shipping are solely due to Israel’s combat operations in Gaza, Kennedy tells BBC Mundo, the Houthis “are also using their attack capabilities to exert greater geopolitical influence in the region and to portray itself as an actor of global importance.”
If so, the effects of the crisis in the Red Sea could continue to further increase costs, transport times and delays in the delivery of products.
Even small delays have the ability to cause a domino effect in a product’s manufacturing chains.
This is explained because global supply chains work in coordination, making each element arrive just in time to join the production line.
Any delay affects the rest of the links in the manufacturing process of a product.
Although the problem may seem limited to shipping companies, analysts warn that Consumers around the world could see some price increases on products in the future.
It all depends on the evolution of events in the coming days and weeks.
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