Red Sea shipping forecasts: 8-week cost increase due

By Al Mayadeen English
Source: News websites
27 Jan 2024 11:30

Freight costs are still on the rise following the US, UK aggression on Yemen, amid the Ansar Allah's attacks on "Israel"-bound ships in support of Gaza.

The new section of the Suez Canal in Ismailia, Egypt, on August 6, 2015. (AP)

Data collected by the UK-based maritime research firm Drewry World Container Index and compiled by Andalou Agency indicate that freight costs are still on the rise post-Ansar Allah attacks that swarmed the Red Sea against "Israel"-affiliated ships, in support of Palestine. Forecasts show that for the upcoming eight weeks, shipping costs will keep increasing.

The Yemeni Armed Forces' defensive operations in the Red Sea have deterred shipping vessels, imposed lengthy reroutes, and hampered arrivals by 10 days to two weeks, accumulating shipping costs.

The Suez Canal was the chosen route for ships for its position connecting Asia and Europe over a short distance, boosting the efficiency of costs and time, but shipping companies have opted to reroute and sail their vessels through the Cape of Good Hope, adding costs.

Statistics gathered by the WCI

The WCI found that freight costs, which stood at $1,382 on November 30, 2023, have risen by 186.8% reaching $3,964 on January 25, 2024.

Since January 25, the year-over-year surge in shipping costs for a 40-foot container has reached 93.6%, with a 5% increase observed on a week-to-week basis, signaling an upward trend persisting for eight consecutive weeks. This is the highest 40-foot container costs have been since October 2022, showcasing a 179% above-average increase since pre-pandemic estimates.

During the same time interval, the most significant increase in shipping charges occurred on the Shanghai-Geneva route, registering a surge of 355.6%. This was closely followed by the Shanghai-Rotterdam route, experiencing a rise of 325.6%, while the Shanghai-New York and Shanghai-Los Angeles routes saw increases of 139.7% and 120.4%, respectively.

Shipping costs are rising aggressively amid geopolitical tensions in the Red Sea

In just 6 weeks, global freight rates have shot up more than 100% pic.twitter.com/XKDKIpMj7s
— Game of Trades (@GameofTrades_) January 25, 2024

Ship traffic surges in the Cape of Good Hope

Other repercussions from the Red Sea conflict can be seen in the decrease in ship traffic through the Bab al-Mandeb Strait.

On January 21, year-on-year shipping traffic decreased by 59.2% according to projections by the International Monetary Fund and Oxford University, in collaboration with PortWatch.

Simultaneously, in the Suez Canal, ship traffic slowed by 44%, but increased by 55.5% in the Cape of Good Hope.

Freedom of navigation

As companies rerouted their ships from crossing the Red Sea to using the Cape of Good Hope, it is worth noting that the Yemeni Armed Forces have stressed repeatedly that all ships are free and safe to make their trips as long as they are not involved in the ban. The ban includes Israeli ships, Israeli-affiliated ships, and ships heading to ports in occupied Palestine.

On that note, earlier in January, the Deputy Foreign Minister of Sanaa, Hussein al-Ezzi, responded to what he referred to as "false and misleading" narratives promoted by the US, Britain, and Germany, regarding the security of navigation in the Red Sea.

Al-Ezzi expressed that Yemen reaffirms the safety and security of navigation for all destinations except the ports of Israeli-occupied Palestine. He stressed that Sanaa aims through this limited, temporary measure to "lift the brutal siege imposed on the residents of Gaza," calling it a humanitarian duty.