The cost of shipping a 40-foot container from China to Europe via the Red Sea is currently around $4,000 USD, up 248% from $1,148 recorded on November 21, 2023, and up 140% from December 23, 2023. 2023.
The cost of shipping goods through the Red Sea has increased sharply since Yemen’s Houthi forces began attacking commercial ships in the waters in late November 2023 and the prolonged disruption of transit operations. The Red Sea could push inflation higher globally.
World Container Index (WCI) by maritime research and consulting firm Drewry, which tracks container shipping rates on eight major routes to and from the US, Europe and Asia, said the cost of shipping a 40-foot container from China to Europe via the Red Sea is currently around $4,000 USD, up 248% from $1,148 recorded on November 21, 2023, and up 140%. compared to December 23, 2023.
Some of the world’s largest shipping lines have been forced to suspend shipping through the Red Sea and redirect ships, including Europe-based MSC, Maersk, CMA CGM and Hapag-Lloyd; and Asia-based Cosco Shipping, HMM and Evergreen Line; as well as oil and gas tanker operators.
An alternative route for this East-West trade route was the one that passed through the Cape of Good Hope at the southern tip of Africa. However, this route will increase travel time between Europe and Asia.
This change in strategy not only increases ship travel time by 10-14 days, but also increases fuel costs.
Some shipping companies have imposed surcharges to compensate for the additional costs.
The situation has become difficult as additional costs as well as insurance premiums have increased.
Container shipping rates on the Asia-Europe trade route are most affected by tensions in the Red Sea.
In particular, journeys to ports in the Mediterranean will be significantly longer. Container shipping rates from port to port on the Asia-Europe route have now increased by 130% compared to early November 2023.
Houthi attacks on commercial vessels moving through the Red Sea have significantly increased risks for shipping companies and raised concerns about the security and welfare of seafarers.
A senior US official said last week that the Houthis had carried out 25 attacks against merchant ships passing through the Red Sea and Gulf of Aden since November 18.
If left unchecked, the deteriorating security situation will have a major impact on the global supply chain. Shipments will be delayed due to long transit times and costs for transporting energy and non-energy goods between Europe. Closing the Red Sea shipping route or any related disruption to this shipping route would have huge consequences.
The Bab El Mandeb Strait is an important route for global trade, especially the transport of crude oil from the Middle East to Europe and the United States. Closing the Red Sea route could lead to delays in deliveries, increasing shipping costs, which could lead to shortages.
Ly Hoang Thinh, Analyst of SUMMIT EXCHANGE FINANCIAL ADVISORY COMPANY LIMITED, compiled the content. Hopefully this article will bring value to you. If you have any questions please contact us.