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Sea Intelligence analysis

Red Sea, freight rates up short-term

by Port News Editorial Staff

Re-routing ships around the Cape of Good Hope won’t have a lasting impact on the vessel capacity shipping companies offer according to Sea Intelligence’s  latest report.

According to the consultancy firm, the blockade of the Red Sea with  attacks on shipping as a result of the war between Hamas and Israel will only have a major impact on supply until the Chinese New Year. To date, the circumnavigation of Africa has led to a 20% drop in services offered along east-west routes, a natural consequence of the impasse generated by the Middle East conflict and carriers having to avoid using the Suez Canal.

Sea Int. points out that the soaring freight rates between Asia and Europe are only partly attributable to the current unrest in the Red Sea region. The new imbalances between supply and demand are also caused by the wave of blank sailings scheduled by shipping lines in the period between Golden Week (celebrated in October) and the Lunar New Year (to be celebrated from February 10th). During this period, the market is usually sluggish and carriers are used to significantly reducing vessel capacity in order to try and match demand.

The cost of transporting a container from Asia to Europe, on the spot market, soared by up to 115% in one week, as a result of the Red Sea blockade and the general unrest in the region with ships being attacked by Houthi rebels.

Translation by Giles Foster

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