Liner shipping could need up to 1.7m teu additional capacity to reroute all their services that normally use the Red Sea route via the Suez Canal following the disruption caused by the Houthi attacks, according to analysts.
Rerouting all containership traffic around Africa would soak up 5%-6% of global capacity, said Lars Jensen, chief executive of Vespucci Maritime.
However, given the current climate of overcapacity, this is certainly feasible, he explained.
Jensen said the boxship segment could require around 1.4m-1.7m teu additional capacity to overcome this challenge, as multiple container line services typically transit the Red Sea including Asia to northern Europe, Asia to Mediterranean, India to Europe and Asia to the US east coast.
“Drought in the Panama Canal means vessels on the Asia to US east coast route cannot use the [Panama] canal and this will result in more significant disruptions for such vessels,” said Jensen.
He also noted how the “real” containership freight rate effect will not be felt until around four weeks’ time.
Containership freight rates on the Asia to the Mediterranean route have already risen by 20%, according to Peter Sand, chief analyst of Xeneta.
Crucially, as highlighted by Jensen, the latest disruption comes amid a “very different context” than for example during the Ever Given casualty of 2021, with freight rates much lower now. The attacks have also come during the typical low season for the east-west box trades.
Nevertheless, securing safe passage through the Suez will be the utmost priority.
“The worst case scenario for shipping would be the failure to get a coalition of navies to escort merchant vessels in the Red Sea,” said Jensen.
Both analysts, however, expect boxships to make up for the longer route via the Cape of Good Hope by speeding up vessels, as, until now, the majority have been slowsteaming with maximum speeds of no higher than 16 knots.
Rerouting vessels around Africa will likely add $1m to a large containership’s fuel costs, said Sand.
Eight containerships bound from Asia to Europe have been diverted via the Cape of Good Hope in the past few days (see below).
A further eight large containerships are currently idling in the Arabian Sea having had their transit of the Red Sea cancelled, analysis of Lloyd’s List Intelligence data confirms. All eight vessels may be diverted to the Cape of Good Hope.
Nine containerships from Europe bound for Asia are presently heading southbound in the Red Sea although the majority appear to be idle off the coast near Jeddah.
Evergreen said: “Long-haul routes connecting Asia to the Mediterranean, Europe and the east coast of the US, and containerships that are scheduled to pass through the Red Sea, will be rerouted around the Cape of Good Hope to continue their voyages to destination ports.”
by Enes Tunagur and Rob Willmington for Lloyds List.com. Click here to read the original article