The Red Sea crisis has been ongoing for more than a year and the situation still remains volatile.

Power struggles in Syria adds to the volatility. Amongst celebrations from many Syrians of getting rid of the old regime, a power struggle has emerged between internal groups in Syria intermixed with military action in the country from Israel, Turkey and the US with Russia and Iran also trying to exert influence on the new emerging power struggle.

The Red Sea crisis is linked to the current Middle East turmoil and the rapidly unfolding development in Syria makes it even more difficult to predict how this will affect the Red Sea crisis.

The leader of the Houthies have made a televised speech trying to levy pressure on Saudi Arabia. In the speech he claims the Houthies to have complete control over preventing Israeli vessels, as well as vessels belonging to countries carrying cargo for Israel to transit the Red Sea. He said: “In recent days, control over Israeli maritime navigation in the Red Sea has reached 100%.”

He added: “Were it not for the unfortunate Arab support and the Arab land bridge supplying the Israeli enemy with goods, the costs for the Israeli enemy would have been far greater.”

The leader goes on to say that the ceasefire agreement in Lebanon does not mark the end of the conflict as the Israeli threat to Lebanon persists. In turn, this could indicate that a ceasefire in Gaza may not necessarily lead to the reopening of the Red Sea.

Keep up to date with the very latest news on the Red Sea situation and download our disruption report.

Understanding the situation 

With over 30% of global containerised traffic moving through the Suez Canal, the unavoidable decision to reroute vessels away from it will have a profound impact on supply chains to and from Asia. Currently, it is too early to ascertain what level of impact this will be and we are working closely with the shipping lines to keep abreast of the latest developments.

Our Assumptions 

What we are experiencing now is similar to the pandemic evolution in logistics and the Suez Canal blockage over the last few years, only at a much quicker pace of disruption and impact. Freight costs and insurance premiums are almost certain to rise, as shipping lines pass on the additional costs of the extended voyages.

Surcharges: New surcharges being applied to both spot and contract rate agreements.

Equipment: Shortage of equipment due to the additional transit times – not enough equipment being available in carrier’s stocks.

Miss sailings: There could be weeks where there are high levels of missing sailings due to the additional transit time of the vessels.

Port Congestion: Port congestions in all European ports is expected.

Trucks: Shortage of trucking.

Global Trade Impacts 

As the disruption and rerouting continues, we outline the impacts to global trade.

Trade Routes: Many trade routes that rely on the Red Sea as a crucial passage connecting Europe with Asia have been impacted by the disruption. The specific routes effected by the disruption are those between Asia, the Indian Subcontinent and Europe. Trade between the Middle East and Europe has also been impacted alongside trade between the Americas and the Asia and Indian Subcontinent.

Schedule Delays: The current schedule delays between Europe and Asia will have significant impacts on the trade between the continents, with gaps and port omissions expected in the coming weeks.

Space Limitations: Space supply will be impacted as the longer transit times are expected to absorb 20% of global capacity. At this moment in time, there are no replacement vessels to fill this shortage, likely impacting other trades very quickly.

Predicted Impacts – Rates & Equipment 

As the disruption and rerouting continues, we’re predicting the following impacts to rates and equipment.

Rates: Rates are expected to increase in relation to the longer distances travelled by carriers operating, higher bunker consumption and reduced capacity.

Supply Chains: Supply chain issues are likely in the upcoming weeks due to the extended transit times of equipment, impacting the return supply of equipment to Asia and exacerbating the anticipated delays in arrivals.

Tariffs: Higher tariffs exceeding free time is likely to be implemented to ensure equipment moves back as fast as possible to origin countries.