Red Sea crisis update: New attacks in the Gulf of Aden and Indian Ocean end 2-week streak of no reported attacks on merchant shipping by Houthis.

On Wednesday 24th April, US forces shot down an anti-ship ballistic missile targeting the “MSC Darwin VI”. MSC’s schedule shows the vessel is an extra loader en route from Djibouti to Sri Lanka.

There were also Houthi reports of an attack on “MSC Veracruz” in the Indian Ocean, although this has only been reported on by the Houthis themselves. The vessel is en route from Houston to Jebel Ali on a round-Africa journey.

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.