Houthi attacks on merchant ships in the Red Sea have caused the largest ship diversion in the history of international trade, creating fears for the next day in the global supply chain and economy. There is also a risk for energy sufficiency, since tanker charters have increased from mid-December until today from 6% up to 251%.
Also, the cost of transporting a container from Asia to Europe reaches 7,000 euros, while the delivery of the goods is delayed by at least 20 days especially for the Eastern Mediterranean ports.
Analysts point out that the increase in costs is rapid and liken it to the time of the outbreak of the pandemic. Shipping companies are avoiding Suez, the distance that ships have to cover increases and with it increases their operating costs and freight rates, increases that pass on to the end consumer. It is estimated that container ships carrying everything from clothing, electronic equipment to toy parts now take an extra two weeks to reach their final destination by circumnavigating Africa. And from the ports of Western Europe and North Africa, goods are loaded onto smaller capacity ships, the so-called feeders, to be transported to the Eastern Mediterranean.
The cost of transporting a container from Asia to Europe and especially to the Mediterranean has quadrupled. It now exceeds 6,500 euros and is quickly heading for 7,000 from the 1,850 euros it cost before the Houthi attacks. The implications for the energy supply sector for Europe are also significant. Delays in shipping LNG from Qatar to the Old Continent are significant. Also, soaring freight rates and diverted tanker routes are limiting supplies to Europe.
“Europe’s oil imports from outside Europe averaged 2.3 million barrels per day from January 1 to 17, down from 2.9 million barrels per day in December,” analysts said. , and they continue: “Imports from Saudi Arabia, India and Kuwait fell by 15%, 31% and 43% respectively from December levels over the same period. These declining import volumes pose a significant threat to diesel supplies.
Europe depends on the Middle East for about a third of its diesel supply and with Insights Global data showing inventory levels 257,000 barrels below the five-year average as of January 11, the risk of shortages is significant.” As well as the problems for container and fuel shipping companies, it is also causing problems for the cruise industry, with some companies already canceling or adjusting itineraries to avoid the area, including industry giants Royal Caribbean and MSC Cruises.
According to Bloomberg ship tracking data, 114 ships – including oil tankers, dry bulk carriers and container carriers – are still plying the Red Sea in recent days. A month ago that number was 272 vessels and six months earlier it was 252. Gas carriers have seen the biggest drop, with their number down 96% from a month ago. This is followed by container ships with a decrease of about 80%, oil tankers with a decrease of about 55% and dry bulk vessels with a decrease of 25% compared to a month ago.
The fare
In the tanker market Houthi attacks on ships and tensions in the Red Sea have led many companies to avoid the Suez Canal and circumnavigate Africa to transport crude oil and petroleum products from Asia to Europe, adding tonne miles on the market and creating conditions for a reduction in ship supply. At the same time, the decline in US inventories, in conjunction with the increase in oil production in the Americas, leads to an increase in demand for ships, so at the end of the day there are not enough tankers to meet the needs of oil transportation, which raises the transportation costs.
“The combination of these has a serious impact on fares. In the category of tankers that transport oil products, freight rates have increased from mid-December until today from 6% up to 251% depending on the route”, points out in “business stories” the analyst of the brokerage house Xclusiv Shipbrokers Dimitris Roumeliotis, and continues: ” In the container shipping industry the turmoil in the Red Sea as well as the decision of all the major container shipping companies to now follow the alternative around Africa has given a big boost to freight rates as the increase in tonne miles on routes leads not only to a reduction in the supply of available of ships, but also in the reduction of empty containers in the ports since a “box” now needs more time at sea to go to its destination, return empty and refill with goods”.
“The average freight rate has jumped to $3,401 per container, an increase of 190% since November 30, 2023. But if we also look at specific routes, such as Shanghai – America East Coast, Shanghai – Mediterranean and Shanghai – Europe we see that the increases in these are of the order of 156%, 223% and 265% respectively. The freight rates in some cases have again reached close to 7,000 dollars per container, but on most routes they range from 1,850 to 4,000 dollars per container”, adds Dimitris Roumeliotis.
In the dry cargo market the trend is reversed. We have a fare drop of up to 75%. This correction in trucking rates is mainly due to states building up coal and iron ore stockpiles to reduce demand as we approach the Chinese New Year, but also due to China’s inability to adequately support its months-long struggling manufacturing sector.
LNG/LPG carriers have not been particularly affected by geopolitical developments.
Source: newmoney.gr
