The increase in attacks on ships and the disabling of transit routes caused an increase in freight.
Iran-backed Houthis in Yemen are attacking ships in the Red Sea, threatening shipping companies and global trade routes. Major shipping companies are stopping transiting through the Bab al-Mandeb transit point, which is critical for the maritime trade of the Middle East, and are turning their routes to the Cape of Good Hope. This means that the travel time of ships increases by 40 percent and the freight rate increases.
Luv Menghani from Dubai-based BluePeak Commodities and Shipping company said in his statement to the press, “The increase in attacks against large companies of the container line such as MSC, Maersk, NYK Line, Hapag-Lloyd means hundreds of ships are stopped.” .” Analyst Gregory Brew from Eurasia Group also pointed out the increasing importance of the Cape of Good Hope after the attacks.
8.8 million barrels of oil were transported daily in Bab al-Mandeb
Located between the Horn of Africa and the Gulf peninsula, the 32-kilometer-wide Bab al-Mandeb connects the Red Sea to the Gulf of Aden and the Oman Sea. According to the US Energy Information Administration, the total oil flow on this line in the first half of 2023 was 8.8 million barrels. According to EIA data, LNG shipment through the Bosphorus amounted to 4.1 billion cf/day in the same period.
Cape of Good Hope extends journey distance
Two shipping companies that suspended their Red Sea route diverted their fleets to the longer Cape of Good Hope. This means adding 40 percent to the travel distance.
Due to the ongoing conflicts in the Middle East, some ships had already started to head towards the Cape of Good Hope to avoid the Suez Canal. Eastbound ships MSC Diana and Zenith Lumos traveled via the Cape of Good Hope last week, connecting in Tangier and Algeciras respectively, according to S&P Global data. In the westbound trade, Maersk Camden, Maersk Campton and MSC Virgo diverted towards the Cape of Good Hope, despite recent ship tracking showing previous movements had occurred via the Red Sea and Suez Canal.
17 thousand ships per year
The Cape of Good Hope is moving towards becoming active again after approximately 150 years. 17 thousand maritime trade ships pass through this canal every year. This accounts for 10 percent of global trade volume. The operator of the Liberian-flagged cargo ship named Al Jasrah, which was hit by the Houthis, suspended all container shipments via the Red Sea by the German company Hapag Lloyd and the Danish shipping company AP Moller-Maersk.
The opinions expressed herein are the author’s and not necessarily those of News2Sea.
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