As major containership operators pause shipping through the Red Sea and Suez Canal, Forbes Magazine has posed the possibility that “Attacks On Ships In Red Sea Could Be First Sign Of Next Supply Chain Crisis.” They speculate that “The recent attacks on cargo ships in the Red Sea by Yemini rebels […] are early warning signs that another international supply chain crisis could happen in the immediate future.”
Ocean carriers have decided that their ships will not transit the Suez Canal due to recent attacks in the region:
- The largest container line in the world – MSC – has announced its vessels will not transit the Suez Canal eastbound and westbound “until the Red Sea passage is safe”.
- Maersk has also stated that all of its ships in the area bound to pass through the Bab al-Mandab Strait will pause their journey until further notice.
- Hapag-Lloyd said they will pause all container ship traffic through the Red Sea until Monday (18 December) and will decide for the period thereafter.
- CMA CGM has announced the halt of all vessels bound for the Suez Canal via the Red Sea and Bab-el-Mandeb Strait due to safety and security concerns.
- Israeli box line ZIM has also made similar decision.
- COSCO-owned container line OOCL announced that due to operational issues, it will stop cargo acceptance to and from Israel with immediate effect until further notice.
The cause of the problem is Houthi rebels in Yemen who have launched a series of attacks on vessels in the Red Sea, one of the world’s busiest shipping routes, and have launched drones and missiles targeting Israel as the Israel-Hamas war threatens to spread.
Maersk on Thursday said its vessel Maersk Gibraltar was targeted by a missile while travelling from Salalah, Oman, to Jeddah, Saudi Arabia and that the crew and vessel were reported safe.
The ABC has carried a statement by The Australian Peak Shippers Association and Freight and Trade Alliance (FTA) about the implications for Australia the suspension of shipping in the Red Sea will have.
“Although this predominantly affects ships serving the Asia to North Europe and Mediterranean routes, recent experience has shown there will be serious impacts in other regions if the situation escalates or lasts for a prolonged period,” it read.
FTA Director Paul Zalai said, “We are likely to know more in coming days — should marine insurers withdraw policies for ships passing through the area or declare the Red Sea a ‘war zone’, shipping lines will be commercially left with little option but to abandon this key waterway.”
He said diversions could add ten days to transit times and estimated arrival dates in North Europe and Mediterranean ports. “We can expect that shipping lines will recover these costs through additional surcharges and cargoes.”
In an Australian context, Mr Zalai suggests any prolonged closure will add to the costs of goods, already under pressure from the effects of wider inflation, especially if it flows to the supply of oil and natural gas.
Meanwhile, Forbes sees the developing situation in this major shipping area as a preview of other crisis situations that could impact supply chains around the world in 2024.
They foresee other disruptive factors as being:
– China and Ukraine,
– Inclement weather
– Cyberattacks
– Technological bottlenecks
– Impact of health crises
It is really too early to determine the impact this will have on international shipping, however it must be noted that 12% of global trade depends on the Suez Canal, according to the Institute of Export & International Trade.
Rerouting the world’s container fleet around the conflict zone does indeed threaten to increase freight rates and cause delays rippling across global supply chains as we enter 2024.
Also see our related article: How Panama Problem Can Affect Australia.
For more information about international trade and shipping – whether via the Suez or any other point on the globe – contact us here at Colless Young. As licensed Customs Brokers and Freight Forwarders we offer correct, professional advice on all your import and export transactions. We are based in Brisbane and provide a complete range of logistics services, including sea cargo, through all Australian ports and airports.
