The recent increase in navigation risks in the Red Sea region has had a significant impact on the shipping market. On December 15 and 16, major shipping companies such as Maersk, Hapag-Lloyd, MSC and CMA CGM reportedly suspended services in the Red Sea. Among them, Hapag-Lloyd suspended service until December 18, and other shipping companies said that they would suspend service until further notice. In addition, MSC also said that ships on some routes will begin to circumnavigate the Cape of Good Hope, while Israeli shipowner ZIM has already begun to detour the African route.
The Red Sea and the Suez Canal are one of the world's important shipping lanes and are of great significance for global shipping and chain security. According to Clarksons, about 10% of the world's maritime traffic is transported through the Suez Canal. If the Far East-North Europe route were to be detoured via the Cape of Good Hope instead of via the Suez Canal, the distance would increase by about 30 per cent, or 6,500 nautical miles. In addition, the continued congestion of the Panama Canal may also lead to more ships choosing to detour via the Cape of Good Hope, further increasing the global average shipping distance.
For container shipping, the impact of ship detours can be even greater. If major container shipowners also participate in the detour, this could partially absorb the capacity for new deliveries next year. However, the actual extent of the impact depends on the degree of unsafe navigation of ships in the Red Sea region and the duration of their duration. According to Clarksons, container ships account for the highest proportion of ships passing through the Suez Canal, at 37% (dwt), and container ships passing through the Suez Canal account for 31 percent of the total container traffic7% (TEU caliber).
The recent freight rate of the European line** may be related to the price increase of the shipping company before the long-term agreement on the European line at the end of the year, but it is also related to the suspension of sailing, detour and the increase in insurance premiums caused by the navigation risk in the Red Sea region. If the scale and duration of subsequent detours increase, freight rates may rise further.
In addition to container ships, bulk carriers and oil tankers also account for a large proportion of transportation through the Suez Canal. If the risk of Red Sea navigation further expands further to tankers, we believe that tanker owners may choose to detour, which will increase the demand for tonne nautical miles.
Considering that the current Red Sea events are still in their early stages, the subsequent evolution of the route depends on the level of navigation risk in the Red Sea region, and there is still some uncertainty. As a result, we maintain our coverage's earnings**, ratings and price targets unchanged.
Note: The data and opinions in this article are provided by the CICC Transportation team and are for reference only.
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