As the Israeli Palestinian conflict escalates, crises are also unfolding in the Red Sea and its surrounding waters. According to news reports, on December 15th, Herbert's cargo ship Al Jasrah was attacked by drones and caught fire near the Strait of Mand.
Subsequently, the attacks became increasingly dense, and multiple ships sailed to the Red Sea and nearby waters when they were attacked by Yemeni Houser militants. Four international shipping companies, Germany's Herbert&Company, Denmark's Maersk Shipping Group, Mediterranean Shipping Company, and France's Daffy Shipping Group, announced a temporary halt to navigation in the Red Sea. OL USA CEO Alan Baer suggests that shipping and logistics customers need to be prepared for at least 90 days of red sea transportation interruptions.
The safety situation is uncertain, and multiple large shipping companies have announced suspension or detours. The transportation capacity of the four major companies accounts for more than 50% of the global total transportation capacity. Long term detours lead to tight transportation capacity, which will cause a 10% reduction in market supply, and the corresponding product prices may rise as a result.
As of now, many shipping companies such as Maersk, COSCO Shipping, Dongfang Overseas, Dafei Shipping, ONE, HMM, Wanhai, Yangming Shipping, Nile Shipping, APL, etc. have chosen to take detours.
Due to the Red Sea crisis, there has been a significant shift in maritime transportation, with ships booking routes from Asia to Europe and from Asia to the East United States, bypassing the Cape of Good Hope in Africa, extending the voyage, increasing transportation capacity investment, and increasing fuel costs by about 30%. The SCFI index continued to rise by 161.47 points last week to 1254.99 points, reaching a one-year and a half high since June 2022; The weekly increase has further expanded to 14.76%, which is also the largest weekly increase since 2016. The four major ocean routes have all risen, and the freight rates on the European route have begun to soar close to $1500.
The detour transportation distance has increased by about 30%, extending the transaction time of goods by 7-15 days and increasing transportation costs such as time and consumption. It is expected that in the short term, due to increased detours, available capacity will further decrease, and spot rates will continue to rise in the coming weeks, and this trend is expected to continue until the end of January.
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