As the situation in the Red Sea continues to deteriorate, the Houthis have repeatedly stated that they are targeting ships with interests in Israel, the United States, and the United Kingdom (cargo to these three countries will be attacked due to skyrocketing freight costs and shipping delays).
The Red Sea is the fastest sea route between Asia and Europe, transporting nearly 12% of the world's cargo. The current crisis has forced shipping companies to use longer routes, severely disrupting shipping schedules while increasing shipping costs.
As the Houthis continue to attack merchant ships crossing the Red Sea, major shipping companies, including Mediterranean Shipping Company and Maersk, have diverted their vessels to a longer route around the Cape of Good Hope in Africa and then sail along the western side of the continent. But this drove up costs, including insurance costs, and caused delays, with delivery times adding an additional 3 to 4 weeks.
Recently, another shipping company, Diana Shipping, announced that it would avoid this shipping lane.
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Anastasios Margaronis, president of Diana Shipping, said in a ** meeting with investors: "The volume of traffic in the Suez Canal is about 40% lower than the volume of operations in the first half of December last year. This is partly a result of the avoidance of the waterway by a number of operators, including us. ”
The falling water level of the Panama Canal also threatens another busy shipping lane.
A senior executive at Genco Shipping & Trading said: "The Panama Canal is likely to cause more serious fleet inefficiencies than the Red Sea. Avoiding ships in the Red Sea is certainly part of the problem, though. ”。
The United Nations ** and the Development Conference said in a report that the transit of the two canals has almost halved compared to the peak period, adding that if the disruption of the main international sea lanes continues, it could lead to greater turmoil in the global ** chain.
It is reported that some companies claim that container leasing has increased by more than 300%.
In addition to sea freight, shipping companies have also increased their fees. These costs may eventually be passed on to the shipper, but it is difficult for the shipper to transfer this part of the cost to the end consumer in a short period of time.
Exporters, retailers, wholesalers and manufacturers are more likely than other companies to be affected, resulting in shortages of goods and production line parts for some customers, or cash flow difficulties or shutdown crises.
The British Chamber of Commerce said 55% of exporters reported business disruptions, as did 53% of manufacturers and business-to-consumer service companies, including retailers and wholesalers. Of all businesses, 37% said they were affected.
The longer the current situation continues, the more likely it is that the pressures will continue to increase.
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