Global Impact: Houthi Rebel Attacks in Red Sea Driving Up Maritime Transport Costs

Santo Domingo, January 10 – The instability generated by the attacks by the Houthi rebels in Yemen on commercial vessels in the Red Sea since November 2023 has significantly impacted freight from Asia and other parts of the world, directly impacting maritime transport costs. This situation, added to the drought in the Panama Canal, has caused uncertainty in the region and is affecting the flow of goods to the Dominican Republic.

The president of the Dominican Federation of Merchants (FDC), Iván García, explained that the problems originated in the Suez Canal as a result of the Houthi attacks on commercial ships have caused a drastic increase in container freight rates from Asia at the beginning of 2024. In October and December, the cost of freight for 40-foot containers from China was $2,800, but has currently escalated to $3,900 for routes lasting between 45 and 60 days. On routes shorter than 45 days, the cost can rise up to $4,300.

This increase will directly impact the prices of items imported from China, especially affecting importers that handle fewer monthly containers, who could face an increase of up to 10% in prices.

Although the World Bank had predicted an increase of 8 to 9% in freight costs for 2024, this has been exceeded in the first week of January, with increases ranging between 25 and 50%, as detailed. Garcia.

Teddy Heinsen, former president of the Shipping Association of the Dominican Republic (ANRD), reported that the diversions of trade routes following the attacks in the Red Sea are causing another increase in cargo prices from Shanghai. The Shanghai Containerized Freight Index (SCFI), which measures spot rates from Shanghai to various global destinations, has risen 7.8%.

The situation in the Red Sea, a route for more than 19,000 cargo ships annually (representing 11% of global maritime traffic), has affected the Suez Canal, which saw its traffic reduced by 33.4%, according to a cable from the EFE agency. . Heinsen stressed that as long as Houthi attacks continue, shipping companies will avoid using the Suez Canal.

This scenario is forcing shipping companies to apply surcharges due to increased fuel and insurance costs when operating through the Cape of Good Hope. Additionally, some carriers are no longer accepting cargo bookings bound for Israel or with Israeli receivers out of an abundance of caution.

The situation poses multiple consequences in the short and medium term, such as port congestion, equipment shortages, additional surcharges for higher costs and estimated delays of 7 to 14 days. Shipping costs and carbon emissions are expected to increase due to longer detours.