More than two years after the Ever Given, one of the world’s most important shipping lanes is once again impassable – this time due to attacks by Yemeni Houthis in the Red Sea. This already has consequences for the port of Rotterdam; is there a threat of similar disruption to world trade?
Marieke de RuiterDecember 21, 2023, 2:00 PM
They are still fresh in the minds of many: the 130,000 sheep, 500,000 erotic articles and 3,500 school diaries that became stuck in the Suez Canal more than two years ago. Then the grounding of the Ever Given container ship led to a days-long blockade of one of the world’s most important shipping lanes, but now it is the Houthi rebels who are forcing major container carriers to avoid the canal between the Red and Mediterranean Seas.
It means that seagoing vessels have to sail 5,500 kilometers via the Cape of Good Hope. For container ships that were already underway, this will lead to a delay of about twelve days; transporters who have just left can pre-sort on the alternative route and take seven days longer. All in all, the Rotterdam port authority estimates that about thirty to forty large container ships will arrive delayed – good for 80,000 containers full of electronics, garden furniture and clothing, plus another 600 tons of oil (products).
The delay poses a major logistical puzzle for shipping companies in the port. After all, Rotterdam is not the final destination for the majority of the cargo: much has to travel further into Europe by truck or inland vessel. Those chains also get confused. It means that people like Rob van den Eijnden of the Korean shipowner HMM – who sails to and from Asia with seven ships a week – are almost continuously on the phone with customers and carriers. “The difficult thing is that we just don’t know exactly when their goods will arrive.”
Cost sheet
The extra travel time also entails additional costs. Not only because of the fuel and the staff who spend longer on board, but also because of the longer lead time for goods. According to port economist Bart Kuipers of Erasmus University, the price tag varies greatly per product. “But on average, a delay in ‘time value’ costs 3 dollars and 50 cents per container per hour.” According to his calculations, with an additional sailing time of ten days, this would amount to approximately 12.6 million dollars per ship with 15,000 containers.
The consumer will not immediately notice this – apart from the spring fashion that may be in stores a little later. The costs of container transport for most products only account for about 2 percent of the retail price. “But it is extremely annoying that this is happening, because it shows again how vulnerable international shipping is to what is happening in the world,” said Kuipers. “At the same time as this blockage, fewer ships can pass through the Panama Canal due to the drought.”
Comparison with two years ago
It means that the two main arteries of world trade are clogged at the same time. And even though it wasn’t looking so flourishing anyway. As a result of inflation and high interest rates, consumers and companies have kept their purse strings tight over the past two years. As a result, international container shipping fell by 4 percent last year and by another 1 percent in the first ten months of this year. Although the latter may now be a blessing in disguise, because the problems with the Ever Given were partly so disruptive because there was a huge demand for items during the pandemic.
As a result, there were major shortages of containers and shipping capacity at the time, but that has changed now. According to Kuipers, many ships can therefore afford to spend a little longer on the road. Moreover, something has changed compared to two years ago: the Egyptian government significantly increased port fees for the Suez Canal. These are now so high that, according to the economist, some shipowners have already chosen to take the detour via Africa.
Van den Eijnden also agrees “that the situation may be the same, but also very different”. He expects that the damage to his company will be less than during the situation with the Ever Given. Although, according to him, the big question is how long it will take before the 134 kilometer long canal can be put back into use. “When will it be safe enough again? Because the promise that there will be a naval coalition is of no use to us yet.”
Extra pressure
What is also putting pressure on things is the Chinese New Year that is almost upon us: a period when Chinese people leave the cities and factories en masse to visit their families in the province. “That means that there are many containers that have to leave China before that time or arrive in China before that time,” says Van den Eijnden. “That will be extremely urgent, because everyone wants to get on board before then.” For the time being, shipowners will therefore find themselves in turbulent waters for a while.
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2023-12-21 13:00:22
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