BDRY - Red Sea crisis: Shipping costs swell further; Houthis launch biggest attack yet

2024-01-10 05:43:05 ET

Shipping rates continue to rise steeply, while vessels face weekslong delays on account of diversions from the Red Sea around the Horn of Africa to avoid attacks by Iran-backed Houthi rebels.

The average shipping costs for 40-foot containers have nearly doubled since the attacks began, according to Drewry's World Container Index that tracks freight rates on eight trade routes. The index reached $2,670 per 40-ft container as of Jan. 4, 88% more than the average 2019 (pre-pandemic) rates of $1,420.

The 10 largest containership operators are estimated to have diverted ~$200B in cargo from the Red Sea since early Dec. Philip Damas, head of Drewry Supply Chain Advisors, said 30% of current shipping capacity has likely been impacted by the attacks and precautionary diversions.

"The weeks leading to Chinese New Year on Feb. 10 are going to be very difficult for shipping," Damas warned, pointing to wider global supply chain implications caused by port congestion, displaced equipment and schedule uncertainty.

Meanwhile, U.S. and U.K. naval forces shot down 21 drones and missiles fired by Houthis on Tuesday in the Southern Red Sea in their largest attack yet. "This is the 26th Houthi attack on commercial shipping lanes since Nov. 19," the U.S. Central Command said . "There were no injuries or damage reported."

A coalition of nations, led by the U.S., beefed up patrol in the Red Sea to help prevent attacks. Secretary of State Antony Blinken warned that if the attacks continue, "there are going to be consequences."

Note that the U.N. Security Council will vote later on Wednesday on a resolution demanding an immediate halt to Houthi attacks .

More on global shipping

• Maersk denies making deal with Houthis to avoid attacks
• Maersk to divert ships from Red Sea 'for foreseeable future'
• ZIM Integrated: Prime Beneficiary Of Red Sea Disruptions
• Red Sea ship attacks send ocean freight rates soaring

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