Home GCC How have global shipping firms reacted to Red Sea tensions? The longer route around the Cape of Good Hope, to avoid attacks by Yemen’s Houthis in the Red Sea, has pushed up shipping costs as well as emissions by Gulf Business with Reuters July 2, 2024 Image credit: Getty Images Attacks on vessels in the Red Sea by Houthis in Yemen have disrupted a shipping route vital to east-west trade, with prolonged rerouting of shipments pushing freight rates higher and causing congestion in Asian and European ports. In June, leading industry groups called for urgent action in the maritime corridor to stop the targeting of merchant shipping vessels. In more than 70 attacks since October 2023, Houthis have sunk two vessels, seized another along with its crew and killed at least three seafarers. Impact on shipping and logistics The attacks have had a huge impact on global shipping routes. From the beginning of November 2023, until the top shipping lines announced they were diverting their ships around the Cape of Good Hope around mid-December, the average number of daily transits in the Canal was about 108 container ships, according to a report by UN-body UNCTAD. From then until January 23, the average dropped to about 62 ships per day. One of the commodities most impacted by the tensions is the global crude oil and oil products shipments which have been taking the long route between Asia, the Middle East and the West. This is up 47 per cent since attacks began on vessels using the shorter Red Sea route, as per data published by the Energy Information Administration. The longer route around the Cape of Good Hope to avoid attacks by Yemen’s Houthis has pushed up shipping costs, as about 12 per cent of world total shipping traffic historically sailed through the Red Sea and Egypt’s Suez Canal. Read: Red Sea crisis pushing 47% crude oil, fuels around Africa Below are actions taken by some shipping companies (in alphabetical order): CMA The French shipping group has suspended most Red Sea voyages but is still sending some cargoes on a case by case basis when French navy escorts are possible, chairman and CEO Rodolphe Saade said on February 29. The company expects disruptions to commercial shipping to last months. Diana Shipping The company’s vessels are avoiding the Suez Canal. “Suez Canal transits are running about 40 per cent below those seen during the first half of December last year. This is partially the result of several operators including ourselves avoiding the area,” President Anastasios Margaronis said in February. Euronav The Belgian oil tanker firm said on December 18 it would avoid the Red Sea until further notice. Evergreen The Taiwanese container shipping line said on December 18 its vessels on regional services to Red Sea ports would sail to safe waters nearby, while ships scheduled to pass through the Red Sea would be rerouted around Africa. Frontline The Norway-based oil tanker group said on December 18 that its vessels would avoid the Red Sea and the Gulf of Aden. Gram Car Carriers The Norwegian auto carrier said on December 21 its vessels were restricted from passing through the Red Sea. Hafnia The Norwegian shipping firm said in January it had halted all ships heading towards or within the Bab al-Mandab Strait. Hapag-LLoyd The German container shipping line, which in January decided to reroute its vessels around Africa until further notice, said on June 11 it did not expect the shipping industry to resume sailing in the Red Sea even if a ceasefire between Hamas and Israel was reached immediately. It said on March 14 that the Red Sea disruptions and global vessel oversupply would force it to cut expenses in 2024, including adapting sailings. It also added a new route, from Turkey to Saudi Arabia, starting June 15. Image credit: Sourced from Hapag-Lloyd HMM The South Korean container shipper said on December 19 it had ordered ships that would normally use the Suez Canal to reroute around Africa. Hoegh Autoliners The Norwegian auto carrier said on December 20 it would stop sailing via the Red Sea. On February 8, it said the disruptions were adversely impacting its capacity and volumes. Klaveness Combination Carriers The Norway-based fleet operator said in January, it would not trade any of its vessels through the Red Sea until the situation improves. Kuehne + Nagel The Swiss logistics group said on March 1 it expects the impact from the Red Sea crisis to last into the coming quarters and impact its second-quarter operating profit in a low double-digit million Swiss francs range. On April 23, CEO Stefan Paul said during a conference call that the company expected freight rates to normalise towards the end of the second quarter. Maersk The Danish shipping group, which suspended Red Sea traffic on January 5 “for the foreseeable future”, said on May 6 that the disruption to container shipping traffic was increasing and was expected to reduce the industry’s capacity between Asia and Europe by some 15-20 per cent in the second quarter. On July 1, it said the upcoming months would be challenging for carriers and businesses, as disruptions continue into the third quarter. It had, in May, forecast that the disruptions would last at least until the end of 2024. It announced a booking window change for Asia-Pacific trades. In its notification statement, the shipping firm said, “As the Red Sea situation continues, we are continually seeking ways to offer our customers more certainty and stability. As part of this, we are making changes to the booking window for our Asia-Pacific (APA) trades. It added that the booking window for APA trades will be set to 28 days starting July 15. Additionally, in a June 21 advisory, the shipping giant increased its ‘Peak Season Surcharge’ due to the ongoing tensions in the Red Sea. Image credit: Sourced from Maersk MSC Mediterranean Shipping Company (MSC) said on December 16 its ships would not transit through the Suez Canal. Nippon Yusen Japan’s biggest shipper by sales suspended navigation through the Red Sea for all vessels it operates, a spokesperson told Reuters on January 16. Ocean Network Express The joint venture between Japan’s Kawasaki Kisen Kaisha, Mitsui O.S.K. Lines and Nippon Yusen said on December 19 it would reroute vessels from the Red Sea to the Cape of Good Hope or temporarily pause journeys and move to safe areas. OOCL The Hong Kong-headquartered container group said on December 21 it had instructed its vessels to either divert away from the Red Sea or suspend sailing. It also stopped accepting cargo to and from Israel until further notice. Star Bulk Star Bulk’s CEO said on February 13 that the Greece-headquartered company would halt sailings through the Red Sea after Houthis attacked two of its ships. Tailwind Shipping Lines The Lidl unit, which transports non-food goods for the discount supermarket chain and goods for third-party customers, said in December it was sailing around Africa for now. Torm The Danish oil tanker group said in January it had decided to pause all transits through the southern Red Sea for now. Wallenius Wilhelmsen The Norwegian shipping group said on December 19 it would halt Red Sea transits until further notice. Yang Marine Transport The Taiwanese container shipping company said on December 18 it would divert ships via the Cape of Good Hope for the next two weeks. It has given no further update. In a report released earlier this year, the UN’s trade and development body, UNCTAD, warned that the disruption caused by the Red Sea attacks, the geopolitical conflict in the Black Sea and the impact of climate change on the Panama Canal have caused a “complex crisis” affecting key trade routes. Read: Shipping industry urges Red Sea action as Houthis sink second vessel Tags Bab al-Mandab Strait Houthi Maersk Mediterranean Shipping Company Red Sea shipping Suez Canal You might also like ADNOC L&S JV inks deal worth $250m for mega ammonia carriers Red Sea insurance costs soar as Houthi shipping threats loom Dubai ranks among top 5 in global shipping index for fifth year World’s largest solar microgrid rises along Saudi’s Red Sea