GLOBAL – Delays to global trade caused by hundreds of ships diverting around Africa to avoid attacks in the Red Sea will inflict months of disruption and imminent price rises on supplies of household items and foodstuffs, trade experts have warned.
The delays to global trade are currently being caused by hundreds of ships diverting around Africa to avoid attacks in the Red Sea.
According to new figures, no less than 350 ships – more than half of the total that would normally travel through the Red Sea and the Suez Canal – are now re-routing around the Cape of Good Hope.
The Suez Canal between the eastern Mediterranean and the Red Sea is a key conduit for household and consumer goods, with around a third of global container traffic passing through the trade route.
Rerouting has resulted in an additional 10 days and EUR 1.6 million (USD 2.03 million) in extra costs to scheduled voyages between Asia and Europe.
Several major shipping companies have already announced surcharges to reflect the increased costs associated with the extra 10-day journey around the Cape of Good Hope.
Danish-owned Maersk is requiring an extra USD 700 (EUR 555) for each 20ft container travelling between China and northern Europe, while CMA CGM, a French-owned shipping giant, is seeking USD 325 (EUR 257) per container.
Fruit, meats, seafood, grains, wine, tea, coffee, and much more will be affected because of the disrupted traffic.
Maersk, the world’s second-largest container shipping company by capacity, recently announced it was extending a 48-hour halt to vessels passing through the Red Sea after one of its ships was attacked on Sunday.
“We will continue to pause all cargo movement through the Red Sea while we further assess the constantly evolving situation,” the shipping company said in a statement.
The Danish-owned carrier said it was assessing a “constantly evolving situation” on the trade route and gave no indication when vessels might resume journeys through the Suez Canal.
High-street retailers and manufacturers ranging from Lidl to Ikea among others have already said they are diverting vessels carrying supplies around Africa, with both Ikea and Geely warning of delays and potential availability constraints as a result.
“The impact of the rerouting of shipping will be felt by consumers in the coming weeks, with the prices of many products rising imminently,” said Marco Forgione, director general of the Institute of Export and International Trade.
“Over the coming months, some goods will take longer to be shipped, as they are re-directed via longer routes and there could be a knock-on impact on availability and prices as a result of higher transportation and shipping insurance costs,” added Helen Dickison, chief executive of the British Retail Consortium.
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