Danger in the Red Sea
Shipping company CMA drastically increases prices for containers
January 2, 2024, 7:12 p.m
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The attacks by the Houthi rebels on ships in the Red Sea are not only disrupting maritime traffic. They are now also driving up the prices for container transport. The French shipping company CMA estimates a hefty surcharge of 100 percent.
The French shipping company CMA CGM is increasing its freight rates for container transport from Asia to the Mediterranean by 100 percent in view of the attacks by Houthi rebels on ships in the Red Sea. Transporting a 40-foot container between Asia and the western Mediterranean will cost $6,000 starting January 15, up from $3,000 previously, the group said. Prices to the Eastern Mediterranean, the Adriatic, the Black Sea and Syria were also drastically increased. However, a spokesman did not want to give any details.
Some shipping companies have been avoiding the Suez Canal with some of their ships since the attacks on freighters in the Red Sea. They reroute the ships via the Cape of Good Hope at the tip of South Africa. The route is significantly further than that through the Suez Canal, which also leads to higher fuel and personnel costs. Insurance costs have increased for trips through the Red Sea.
After an attack on one of its freighters at the weekend, the Danish shipping company Maersk announced that it was suspending transport through the Red Sea until further notice. Where it makes sense for customers, ships would be rerouted around the Cape of Good Hope. Maersk is following its German competitor Hapag-Lloyd, which also routes its transports further around the African continent.
Germany’s largest container shipping company had previously declared that it would continue to avoid the maritime area in the Middle East due to the uncertain situation in the Red Sea. “We are monitoring the situation very closely every day, but will reroute our ships until January 9th.”
Shares in the companies concerned have risen since the attacks on expectations that longer routes will lead to higher freight rates. On Tuesday alone, Hapag-Lloyd’s shares rose by another five percent to 143 euros. Within three weeks, the price premium adds up to around 40 percent. The attacks in the Red Sea have been occurring for several weeks after the Iran-backed Houthi rebels in Yemen declared their solidarity with the radical Islamic Hamas.