Houthi attacks in the Red Sea
Prices for container freight are increasing significantly
January 4, 2024, 5:19 a.m
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18 shipping companies are currently avoiding the Red Sea because there are fears of attacks by the Houthi rebels there. The detour via South Africa is lengthy. This is now also noticeable in freight rates.
According to the United Nations, 18 shipping companies are redirecting their ships and allowing them to sail around Africa instead because of the attacks on cargo ships in the Red Sea. The diversion of the ships via South Africa means an extension of the journey time by ten days and a “negative impact on trade and increasing freight rates,” said the head of the International Maritime Organization (IMO), Arsenio Dominguez. The supply chain management technology company project44 even spoke of an extension of seven to 20 days.
As the international freight booking platform Freightos reports, freight rates have more than doubled this week to over $4,000 per container. Between Asia and the Mediterranean they rose to $5,175. Some major shipping companies announced rates of over $6,000 for Mediterranean shipments in the middle of the month. Surcharges ranging from $500 to $2,700 per container could further drive up overall prices, Freightos said.
Egypt’s Suez Canal connects the Red Sea with the Mediterranean and is the fastest route to transport fuel, food and consumer goods from Asia and the Middle East to Europe. About a third of the world’s container freight, including electronics, medicines, furniture and machine parts, is shipped via this route.
In Yemen, the Iran-backed Houthi rebels have declared solidarity with the radical Islamic Hamas in the Gaza Strip and have repeatedly attacked ships off the coast they control with drones and missiles. Maersk, Hapag-Lloyd and other shipping companies have announced that they will avoid the Red Sea. By Wednesday, more than 180 ships had already been rerouted around the South African Cape of Good Hope. Although rates have soared, they are still well below the pandemic-related record of $14,000 per container for shipments from Asia to northern Europe and the Mediterranean.
In order to protect merchant shipping, the US announced in mid-December that it was forming an international military coalition. According to the US Department of Defense, more than 20 countries now belong to this group. Germany is not yet one of them, but is considering joining, according to the Federal Ministry of Defense.