BAKU, Azerbaijan, January 15. In a dramatic response to persistent attacks by Houthi militants in the Red Sea, major shipping companies have been forced to reroute their fleets, with the US and UK launching airstrikes on Houthi targets on January 11, 2024.
BMI, a Fitch Solutions company notes that this strategic shift in shipping is impacting a significant share of global container capacity, redirecting trade flows valued at over USD 200 billion since the attacks commenced in mid-November 2023, extending through early January 2024.
According to data from Clarksons, approximately 28 percent of the world's container shipping traffic passes through the Red Sea, emphasizing the substantial impact that these route changes will have on the container shipping sector. While segments such as product tankers (5.1 percent of global volumes transiting the Suez Canal), crude tankers (4.4%), and dry bulk carriers (3.9 percent) may experience a more moderate level of disruption, the repercussions of this shift are reverberating throughout the maritime industry.
The Suez Canal, a primary artery for maritime trade between Asia and Europe, serves as the quickest and most direct connection for these regions, playing a vital role in the transportation of energy, commodities, and consumer goods. In response to the escalating threat, the majority of the world's principal container carriers, including MSC, Maersk, CMA CGM, Hapag-Lloyd, ONE, Evergreen, HMM, and Yang Ming, initiated diversions from the Red Sea in mid-December 2023. Opting to navigate around Africa via the Cape of Good Hope, these companies collectively manage nearly 70 percent of global container shipping capacity.
Cosco, the world's fourth-largest container carrier with an 11 percent market share, has not entirely abandoned the Red Sea route but has ceased making port calls to Israel in a strategic move to mitigate risks. As the situation unfolds, the global shipping industry is grappling with the unprecedented challenges posed by geopolitical conflicts impacting critical trade routes.
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