With the frequent attacks on Maersk container ships in the Red Sea, the uncertainty of security threats in the Red Sea has increased, and more container shipping companies have suspended operations. The market expects the detour to push up freight rates, and the stock prices of many shipping companies are rapid**.
Recently, under the appearance of the Palestinian-Israeli conflict, Yemen's Houthi forces have been involved, suggesting that the security of the Red Sea is facing challenges. They made clear their support** but were restrictive about ships involving Israel or ships destined for Israel. If Israel restricts access to essential goods in Gaza, they will restrict the passage of ships bound for Israel in these waters.
However, ships linked to Israel or destined for Israeli ports "are judged by the Houthis, not shipping companies." They control the Bab el-Mandeb Strait and become a key point on the Asia-Europe route.
The Bab el-Mandeb Strait is vital for global shipping, especially as a passage through the Suez Canal. The Houthis have made it clear that they are targeting all ships in the Red Sea and the Gulf of Aden. Further deterioration of the situation could lead to the short-term closure of the Suez Canal.
Maersk and Hapag-Lloyd announced on Friday that they would suspend sailings due to a series of attacks on merchant ships in the Red Sea. Maersk suspended all container traffic through the Red Sea, choosing to detour to Africa, while Hapag-Lloyd announced the suspension of container ship transportation through the Red Sea until the 18th, and will make a decision at a later time. Circumnavigating the Cape of Good Hope is now the preferred choice for many shipping lines, and if the route is no longer safe, finding an alternative route will be a top priority.
On December 16, Orient Overseas Container Market (OOCL) announced in its official website that due to operational issues, the company will immediately stop receiving shipments to and from Israel until further notice. Meanwhile, HMM, South Korea's largest container shipping company, announced that it would sail around the Cape of Good Hope, the southernmost point of South Africa, instead of the Red Sea route via the Suez Canal.
Prior to OOCL and HMM, four of the world's top five container carriers had said they would suspend all vessel sailing in and around the Red Sea. Six of the world's top 10 shipping companies, which control 58 of the world's shipping routes, have publicly stated that they will stop passing through the Red Sea route9% capacity. The remaining four companies have not publicly disclosed whether they will make adjustments to the Red Sea route.
The security of the global ** chain has once again become the focus. However, China has established a strong and well-established automotive industry chain, and after three years of global epidemic fluctuations, geopolitical complications and frequent natural disasters, in this context, compared with the first interruption of automobile production in China, vehicle exports may be directly affected.
The Bab el-Mandeb Strait-Red Sea-Suez Canal-Mediterranean express route is at least 7-11 days shorter than the route around the Cape of Good Hope. If the Bab el-Mandeb Strait is difficult to return to normal in the short term, longer routes will reduce vessel turnover efficiency, leading to an imbalance between supply and demand of cargo, a sharp reduction in transaction volumes, and a surge in transportation costs.
Due to the situation in the Red Sea, shipping costs from the Far East to Israel have been significantly lower**. According to the Financial Associated Press, the person in charge of a freight forwarding company revealed that the freight of the relevant routes has reached more than $6,000 FEU, while in the first half of the month, the cost was only more than $1,000 FEU, and at the beginning of the second half of the month, it was only more than $2,000 FEU.
Industry insiders pointed out that if the route is diverted to the Cape of Good Hope, the cost of transporting a Tesla from China to Europe will increase by at least 20%. It's worth noting that the automotive industry in Central Europe** is not limited to Tesla.
According to the data of the Passenger Association, driven by new energy vehicles, the number of China's automobile exports from January to October 2023 will reach 4.24 million, and the export growth rate will continue to grow strongly, becoming the world's largest automobile exporter. The export destinations of new energy vehicles have shifted from the traditional markets of Southeast Asia, South America, Africa, Russia, and Mexico to Europe, among which Belgium, Spain, Slovenia and the United Kingdom have become the highlights of exports.
In 2022, the International Energy Agency (IEA) noted that 16% of electric vehicles sold in Europe came from China. In addition to Tesla China, local Chinese new energy vehicle companies such as SAIC Motor Passenger Vehicle and BYD also performed strongly.
Based on a benchmark of 4.8 million total vehicle exports for the year, China is expected to export more than 1.8 million vehicles to Europe in 2023. However, if the Bab el-Mandeb Strait incident leads to the closure of the Suez Canal, even for a short time, it will disrupt ship planning and hit China's car exports.
Since the sharp increase in domestic automobile exports, the capacity of ro-ro ships has been seriously insufficient, and even led to a shortage of supply at the end of last year, which has become a problem in the development of China's automobile industry.
Since 2023, car manufacturers have increasingly turned their attention to China-Europe railway trains. Taking Tianjin as an example, the new energy vehicles produced in the region can reach Central Asia and Europe in more than two weeks through the China-Europe train, which is a faster option than the original 45-day sea transportation time. Railway transportation is not only low, but also safe and reliable, so more and more shippers choose China-Europe railway trains.
In addition to Tianjin and Xi'an, Chongqing, Guangzhou, Suzhou, Wuhan and Hefei and other important automobile industry cities have also launched China-Europe railway trains. In the current increasingly complex geopolitical context, timeliness and safety have become important considerations in logistics and transportation. Therefore, the China-Europe special train has become an important supplement to sea and air transportation, providing an efficient and fast international logistics channel for domestic automobiles.