The American shipping company Flexport announced that about 180 cargo ships changed their destinations away from the Bab al-Mandab Strait (which connects the Indian Ocean and the Red Sea), or stopped awaiting instructions from the companies operating them.
This came in a report issued by the company yesterday, Thursday, at a time when the Yemeni Houthi group continued its threats to target ships linked to Israel crossing the strait located south of the Red Sea, in solidarity with the Palestinians in Gaza.
The company reported that about 180 container ships diverted around Africa or stopped awaiting instructions to avoid attacks in the Red Sea.
Shipping companies have begun moving their ships to the Cape of Good Hope route, to escape any attacks they may be exposed to, which means greater transportation costs and a longer delivery period.
Hundreds of other ships are likely to avoid Bab al-Mandab for fear of Houthi attacks
Today, Bloomberg quoted the Dirori Global Container Transport Price Index, indicating that the cost of transporting goods in a 40-foot container from Asia to Northern Europe jumped by 16% over the past week.
While the cost of transportation increased by 41% this December, which applies to fuel shipping bills, with a sailing period that may extend for an additional two weeks, by taking the Cape of Good Hope route.
Several results
Bloomberg said that the large-scale rerouting from the Bab al-Mandab Strait to the Cape of Good Hope route includes ships transporting everything from toys and car parts to gas, fuel and crude oil.
In the short term, this will lead to several results:
- Increased costs
- Weeks of delay
- High commodity prices
- It will disrupt logistics for onshore companies that rely on offshore schedules
The tensions come at one of the busiest times of the year for exports from China for restocking by retailers, after the holidays and before Chinese factories close for the Lunar New Year holiday next February.
On November 19, the Houthi group announced the seizure of the Galaxy Leader cargo ship, owned by an Israeli businessman, in the Red Sea and taking it to the Yemeni coast.
The Houthi group has vowed on more than one occasion to target ships owned or operated by Israeli companies, in solidarity with Palestine, calling on countries to withdraw their citizens working on the crews of these ships.
Ships circling the Cape of Good Hope need 60 days to reach from China to Europe, while they only need 40 days if using the Suez Canal, according to Eric Martin Neufel, executive vice president of the shipping company Geodes, who added that the cost increases by 4 or 5 times when circling. Around Africa instead of crossing the Suez Canal. The cost of air freight is much higher than the cost of sea transportation of goods.