Shibhaljazeera Net | Shipping | Red Sea
International concern continues over the Red Sea crisis, which has become a chokepoint for global maritime trade, leading to the “shaking of the maritime shipping industry,” according to the latest United Nations reviews.
The UNCTAD (United Nations Conference on Trade and Development) expects moderate growth in the maritime sector, with trade volumes likely to increase by 2% in 2024, driven by bulk goods like iron ore and coal, as well as container trade. However, the risk of disruption remains high.
Maritime chokepoints have become increasingly susceptible to congestion, climate-related effects, and political instability. Reports indicate that the ongoing Red Sea crisis, which has persisted since November 2023, has led to increased security risks, prompting major shipping lines to reroute their vessels away from this corridor.
This detour not only adds more time to the journey but also increases fuel consumption and emissions. According to the UNCTAD report, ships now take an additional 10 days when rerouting around the Cape of Good Hope, further raising shipping costs.
The UNCTAD Conference on Trade and Development notes that the shipping industry is trying to reduce its carbon footprint but faces the dual challenge of dealing with rising emissions and higher costs. The industry, which contributes about 3% of global greenhouse gas emissions, must now contend with the reality that these longer rerouted trips result in increased fuel consumption.
A container ship traveling from China to Europe via the Red Sea could incur an additional fuel cost of $1 million due to delays, but taking the longer route around Africa could push the cost to $1.7 million, with added insurance, wages, and fuel expenses.
UNCTAD stresses that global supply chains must become more adaptable and that technology and data should be integrated to predict and respond to disruptions.
Shipping Rates: A 30% Increase
Shipping data reviewed by Shabait indicates that maritime shipping prices have surged by 30%, with a similar increase in air freight costs, hitting importers hard.
Shipping companies have notified clients of a 30% rise in shipping rates, and part of the increase will be passed on to consumers, contributing to higher prices for imported goods.
Israeli shipping company ZIM sent a notice to its customers stating that, starting November 1, there will be an additional charge of $1,000 for a 20-foot container, $1,500 for a 40-foot container, and $1,600 for a 60-foot container on routes from the Far East to Israel.
These fees are added to the current rates of $3,348 for a 20-foot container and $4,884 for a 40-foot container.
Other international shipping companies have also raised their tariff rates. For example, Swiss shipping company MSC increased the price of a 40-foot container (the most common size) from $3,000 to $4,700.
Reports confirm that these price hikes exacerbate the hardships for Israeli importers and exporters since the attacks by the Sanaa government on cargo ships traveling from the East.
According to a statement from an Israeli importer seen by Shabait on the “Wynet” Israeli website, costs are rising amid high demand, while shipping companies are benefiting from this increase.
The situation for importers or exporters who need to ship goods by air is also difficult, as foreign airlines rarely fly to Israel, and all cargo on planes flying from Israel is cut off.
Moreover, despite El Al’s cargo revenue increasing by 107%, it does not compensate for the lost gap, according to Wynet. A third of the goods imported into Israel are transported by air.
Data from the Israeli Passenger Authority, released last September, indicates that there was a 48% decrease in cargo flights on passenger planes. However, there was an increase in cargo flights, which led to a 2.5% decrease in total imports and exports by air.