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Vessel traffic in Red Sea declines as freight rates see slight decrease
Composite index per 40-foot container caps at $3,786, down 4.5 percent after 8-week rise, according to UK-based Drewry’s World Container Index.
Maersk was among the first shippers to reroute vessels around the Cape of Good Hope after the Houthis attacked ships linked to Israel in the Bab-el-Mandeb Strait in the Red Sea. / Photo: Reuters
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Maersk was among the first shippers to reroute vessels around the Cape of Good Hope after the Houthis attacked ships linked to Israel in the Bab-el-Mandeb Strait in the Red Sea. / Photo: Reuters
Freight rates have seen a slight decrease in the last two weeks after they skyrocketed amid geopolitical tensions in the Red Sea.
But the rates still are well above last year’s levels.
The 40-foot container composite index stood at $1,382 on November 30, according to data from the Drewry World Container Index compiled b y Anadolu Agency.
The Iranian-backed Yemeni political organisation, the Houthis, launched attacks on commercial vessels linked to Israel in the Bab el Mandeb Strait in the Red Sea, after which shipping companies rerouted around the Cape of Good Hope, thus extending travel times by 10 days to two weeks.
Ship traffic in the Red Sea rapidly declined and the rerouting caused freight rates to double due to counter-attacks against the Houthis, led by the US and the UK. Shipping companies were advised not to navigate through the region.
It has been nearly three months since the tensions in the Red Sea started, and although the increase in freight rates slowed, prices are still quite high.
The prices rose for eight weeks, reaching $3,964 on January 25, up 186.8 percent, amid increased tensions in the Red Sea and rerouting of commercial vessels.
The composite index per 40-ft. container was at $3,824 on February 1, and at $3,786 on Feb. 8, posting a two-week decline of 4.5 percent, though it is 90 percent higher year-on-year and 174 percent above the level on Nov. 30, and up 167 percent compared to pre-coronavirus pandemic levels.
As of Feb. 8, the composite index per 40-ft. container on the Shanghai-Geneva route decreased 11 percent week-on-week to $5,225, Shanghai-Rotterdam 5 percent to $4,426, and New York-Rotterdam 4 percent to $611, whereas the Shanghai-Los Angeles route posted an uptick of 8 percent to $4,771, and Shanghai-New York 2 percent to $6,268.
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Global shipping giants halt Red Sea operations after Houthi attacks
Freight volume in Red Sea down 80 percent
Freight volume in the Red Sea fell by more than half in December, and in January, the volume in the Red Sea and the Suez Canal was 80% lower than before the crisis, according to the German economic institute, IfW Kiel.
“Arrivals at ports in Southern and Northern Europe are being delayed. In Hamburg and Bremerhaven, as well as in Rotterdam and Antwerp, 25% fewer ships dock compared to the average numbers of 2023, as of January 2024,” it said Wednesday.
“Container ships are significantly delayed compared to their original plans, resulting in fewer ship arrivals in many European ports,” said Julian Hinz, head of the Kiel Trade Indicator.
Hinz noted that the difference will only normalise as longer travel routes are factored into logistical planning.
“While individual companies may suffer from delivery delays, overall, there are no shortages expected in raw materials or consumer goods; one reason for the brisk trade activity may also lie in the Chinese New Year, as trade in China typically picks up before the holidays, however, it tends to decrease afterward,” he added.
Maersk expects prices to normalise as transit through Suez Canal
A third of Danish shipper Maersk’s freight volumes were affected by the disruption in Red Sea’s traffic, and the company will not resume transiting in the Red Sea until safety in the area is guaranteed, Vincent Clerc, CEO of Maersk, said Thursday.
Freight prices and the profits of shippers rose sharply during the pandemic, though Clerc said the situation now is not comparable, and the prices will plummet as s oon as vessels go back to transiting through the Suez Canal.
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How are Houthi attacks on ships in Red Sea affecting global trade?
SOURCE: AA
