Freight rates have been increasing for eight weeks amid geopolitical tensions in the Red Sea, according to data from the World Container Index from the UK-based maritime research firm, Drewr,y compiled by Anadolu.
The Iranian-backed Yemeni political organization, 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 is rapidly declining due to the attacks against the Houthis, led by the US and the UK, and shipping companies were advised not to navigate through the region.
The Suez Canal connects the Mediterranean and the Red Sea and is the shortest route between Europe and Asia, accounting for about 12% of global trade. But the increase in travel times and costs for rerouting around the Cape of Good Hope following the Houthi attacks has had a negative effect on freight rates.
In light of the developments, the 40-foot container composite index rose from $1,382 on Nov. 30 to $3,964 as of Jan. 25, an increase of 186.8%, according to data from the World Container Index compiled by Anadolu.
Since Jan. 25, the year-on-year increase in freight rates of a 40-foot container reached 93.6%, and the rates posted a hike of 5% week-on-week, indicating an eight-week rise.
The spot freight rates of a 40-foot container have reached the highest since October 2022, currently standing at 179% above the average of the pre-pandemic level.
In the same period, the highest rise in freight rates was recorded in the Shanghai-Geneva route with 355.6%, followed by Shanghai-Rotterdam with 325.6%, Shanghai-New York with 139.7%, and Shanghai-Los Angeles with 120.4%.
• Trade volume in Bab-el-Mandeb Strait down 59.2%
Ship traffic in the Bab-el-Mandeb Strait slowed by 59.2% year-on-year for the week ending Jan. 21 as Red Sea attacks escalated, according to the PortWatch database by the International Monetary Fund and Oxford University.
As for the Suez Canal, the trade volume posted a decrease of 44% in the same period, however, the trade volume in the Cape of Good Hope recorded a surge of 55.5% in the same week.
Following attacks on the Bab-el-Mandeb Strait in the Red Sea, the Danish shipping company Maersk, the world's largest container company, the Italian-Swiss Mediterranean Shipping Company (MSC), German shipping company Hapag-Lloyd, the French shipping company CMA CGM and the British energy company BP suspended operations in the region.
The Danish tanker company, Torm, suspended operations through the southern Red Sea, while the UK-based oil company, Shell, followed suit.
Qatar's state-owned oil firm QatarEnergy has decided to deliver liquefied natural gas (LNG) ships to European customers via the Cape of Good Hope due to the ongoing situation in the Red Sea.
The company announced Thursday that there would be a delay of 10 to 12 days in LNG shipments to the Spanish energy utility company Endesa.