LONDON, Dec 18 (Reuters) - Mounting attacks by the Iran-aligned Yemeni Houthi militant group on ships in the Red Sea are disrupting maritime trade as leading global freight firms reroute around the Cape of Good Hope to avoid the Suez canal.
That will increase their costs and add about 10 days onto a journey from Asia to North Europe and East Mediterranean, experts said. It typically takes about 27 days to sail from Shanghai to Rotterdam.
About 12% of world shipping traffic goes through the Suez Canal, the shortest maritime route between Europe and Asia.
The attacks have stirred memories of 2021 when container ship Ever Given ran aground in the canal, blocking dozens of container ships carrying products ranging from mobile phones to designer goods for six days.
The episode aggravated supply strains caused by the coronavirus pandemic, delaying shipments of goods by months and sending freight rates soaring.
Now, with more shipping capacity available, analysts and experts do not expect a crunch just as severe, but they expect freight rates to rise.
Below are some of their reactions:
ZVI SCHREIBER, CEO OF GLOBAL FREIGHT PLATFORM FREIGHTOS:
"What would be different this time (compared with 2021) if there is a widespread diversion from the Suez is the excess capacity available to address the disruption.
"In 2021, there were no extra available ships to take the place of delayed vessels at origin ports. This time, there is a record level of excess capacity.
"So, shippers could expect longer lead times due to longer voyages, but operations should continue reasonably well. Freight rates will likely increase on these longer voyages too, but due to carriers looking for ways to utilize excess capacity, it is unlikely that rates will spike to levels experienced during the pandemic."
PETER SAND, CHIEF ANALYST AT OCEAN FREIGHT SHIPPING DATA AND INTELLIGENCE PLATFORM XENETA:
"The ocean freight industry has been deeply scarred by Ever Given (in 2021) and is frankly terrified of any situation which threatens the closure of the Suez Canal.
"Due to the importance of the Suez Canal to global supply chains, even a small disruption can have big consequences.
"We may also see the cost of moving freight by ocean increase dramatically. Depending on the scale and duration of any disruption at the Suez Canal, we could see ocean freight shipping rates increase by anything up to 100%."
LARS JENSEN, CONTAINER SHIPPING ADVISOR AT VESPUCCI MARITIME:
"A lot of new container shipping capacity has entered the market this year. There is no shortage of ships now, so even if this drags out, it won't be catastrophic for supply chains."
"A lot of goods are produced in China leading up to the Chinese New Year, creating extra pressure on the shipping industry to export those good. But some of the ships that would be needed there in January, are now paused or going around Africa, which means they may not make it back to China in time."
MARCO FORGIONE, DIRECTOR GENERAL AT THE INSTITUTE OF EXPORT AND INTERNATIONAL TRADE:
"This is going to have a significant impact on all the retailers, particularly if we look at the build-up to Chinese New Year.
"The goods need to be in the shops at the right point of time in the season. So if you miss that season, the goods aren’t relevant to the marketplace.
"So you then have the risk that the big retailers or big brands have got stock that is pretty much of no value, and they need to be able to recoup that down the line. This has the potential to turn the clock back to what happened during the lockdowns.
"Container rates are going to go up, the cost of insurance is going to go up, all of this has an impact on the price point for the consumer."
ABN AMRO ANALYST ALBERT JAN SWART:
"Wholesalers, retailers and manufacturing firms are still unwinding excess inventories at the moment, so I do not expect severe shortages or extremely high freight rates like during the pandemic."
ING ANALYST RICO LUMAN:
"This will at least lead to delays in late December, with knock-on effects in January and probably February as the next round will also be delayed.
"The disruption could lead to a renewed rise in spot rates, also as the Panama Canal crossings are limited far into 2024. The situation is especially complicating supply chains connecting the U.S. As the alternative route is now also affected.
"Currently, there’s overcapacity, meaning that the disruption won’t lead to capacity shortages like we have seen over the pandemic."
(Reporting by Toby Sterling in Amsterdam, Jacob Gronholt-Pedersen in Copenhagen and Jonathan Saul and Helen Reid in London; Compiled by Josephine Mason Editing by Tomasz Janowski)
