FRANKFURT
\nGermany\u2019s Hapag-Lloyd and Hong Kong\u2019s OOCL said on Thursday they would avoid the Red Sea, the latest shipping companies to do so after attacks by Yemen\u2019s Houthi group on vessels disrupted global trade, prompting the establishment of a naval task force.
\nThe hostilities have put a chokehold on ship passages through the Suez Canal, which handles about 12% of worldwide trade. The Suez Canal is most vital to the movement of goods between Asia and Europe, but global logistics executives warned that sending ships on alternate routes could roil global supply chains, causing backups at ports and shortages of vessels, containers and equipment that are suddenly in the wrong place.
\n\u201cThe situation remains fluid, things could change quickly, which is why contingency plans that include a plan A, B and C are critical to keeping supply chains moving,\u201d said Matthew Burgess, vice president of global ocean services at C.H. Robinson Worldwide.
\nHapag-Lloyd said it would reroute 25 ships by the end of the year from the key waterway as freight rates and shipping stocks have increased because of the disruption. Avoiding the Red Sea and Suez Canal means following a far longer route around Africa.
\nThe Iran-aligned Houthis, who control much of Yemen, have been attacking ships passing through the Bab al-Mandab Strait at the southern end of the Red Sea for weeks in what they say is a response to Israel\u2019s war in Gaza.
\nTraders are meanwhile scrambling to find workarounds, including air flights, to get consumer goods to retailers, with journeys around Africa adding roughly 10-14 days extra to voyage times.
\n\u201cUp to this moment, we have guided OOCL-operated vessels to either divert route or suspend sailing to Red Sea,\u201d Hong Kong-headquartered container group OOCL told Reuters in a statement on Thursday, the first time it had confirmed pausing sailings.
\nA crisis at a single point in the supply chain can cause ships to bunch up, upending arrival and departure schedules at seaports and cascading delays throughout the system, said Christian Sur, executive vice president of ocean freight at Unique Logistics.
\nThe cost to ship a container from China to the Mediterranean was up 44% in December alone to reach $2,413, due to the Red Sea disruptions, Freightos said earlier this week.
\nIf the conflict persists or intensifies those so-called \u201cspot\u201d prices for cargo that isn\u2019t under contract \u201ccould double or triple from current levels,\u201d Sur said.
\nGlobal furniture seller IKEA is among the shippers warning of potential cargo delays and product shortages. Elsewhere, Finnish elevator maker Kone estimated that some shipments could be delayed by two to three weeks.
\nWhile goods that travel by container, including apparel, toys and food, are most at risk – other products are being affected.
\nU.S. soybean exporters, who were already switching shipments from the drought-stricken Panama Canal to the Suez Canal, are weighing whether to start putting crops on trains to the West Coast to access ships that go directly to China and other Asian markets to avoid significantly longer alternate voyages around South America or Africa.
\n\u201cYou\u2019ve got all these imperfect options available,\u201d Mike Steenhoek, executive director of the Soy Transportation Coalition.
\nAnalysts warned that some retailers could start running low on some goods by February, though after the COVID-19 pandemic more companies have sought resilience in supply chains by buying from exporters in different regions.
\n\u201cWe are more experienced having gone thru COVID,\u201d said Sur, whose firm counts retailers among its clients.<\/p>\n","protected":false},"excerpt":{"rendered":"
FRANKFURT Germany\u2019s Hapag-Lloyd and Hong Kong\u2019s OOCL said on Thursday they would avoid the Red Sea, the latest shipping companies to do so after attacks by Yemen\u2019s Houthi group on vessels disrupted global trade, prompting the establishment of a naval task force. The hostilities have put a chokehold on ship passages through the Suez Canal, […]<\/p>\n","protected":false},"author":2,"featured_media":376801,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":{"0":"post-376783","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n