Source: Global Times
[Global Times special correspondent in Germany Aoki Global Times reporter Yin Yeping Ding Yayi] "Yemen's Houthi attacks on ships in the Red Sea threaten global trade. Switzerland's "Neue Zürcher Zeitung" reported on the 17th that in view of the continuous attacks on merchant ships, the global shipping giant Denmark's Maersk and the German shipping company Hapag-Lloyd both announced last Friday that they would suspend navigation in the Red Sea. Following Maersk and Hapag-Lloyd, Switzerland's Mediterranean Shipping Company and France's CMA CGM Group also announced on the 16th that their cargo ships would suspend Red Sea voyages. On the 18th, Evergreen Marine issued a statement saying that due to safety concerns, the company will suspend Israel's import and export services with immediate effect. As some of the world's largest shipping lines suspend Red Sea sailings, more will be affected. Egypt's Suez Canal Authority said it was "closely monitoring" tensions over the Red Sea and the impact on the canal transit.
Shipping companies are closely monitoring the situation in the Red Sea
Since the outbreak of the new Palestinian-Israeli conflict, Yemen's Houthi rebels have frequently launched missile and drone attacks on Israel on the pretext of "supporting Palestine", and have continuously attacked ships "associated with Israel" in the Red Sea. Zhong Zhechao, founder and CEO of One Shipping, said in an interview with the Global Times on the 18th that according to continuous tracking, in less than a month, about 16 ships of various types were attacked or even seized.
At present, the world's major shipping companies are closely monitoring the situation in the Red Sea. In a statement to the Global Times, Maersk said that the recent attacks on merchant ships in the region are shocking and worrying, and pose a major threat to the safety of seafarers. Following the near-attack on the Maersk Gibraltar on 14 December and the attack on a container ship by another company on 15 December, Maersk decided to suspend all ships heading to the Bab el-Mandeb Strait in the region until further notice.
U.S. Department of Defense: A U.S. warship and multiple merchant ships were attacked in the Red Sea Photo source Visual China
The Red Sea is located at the junction of two continents, Asia and Africa, connecting the Arabian Sea and the Indian Ocean through the Bab el-Mandeb Strait in the south and the Mediterranean Sea and the Atlantic Ocean in the north through the Suez Canal. The route through the Bab el-Mandeb Strait, the Red Sea, and the Suez Canal is one of the busiest maritime routes in the world. According to the Neue Zürcher Zeitung, about 12% of the world's cargo traffic passes through the Red Sea and the Suez Canal. At its peak, about 500 container ships passed through the Bab el-Mandeb Strait in southern Yemen every day.
Zhong Zhechao told the Global Times that the Suez Canal should be the world's largest transportation artery, especially when the Panama Canal is currently facing serious drought and reduced navigation capacity, the Suez Canal, as the main navigation channel of Asia-Europe, Asia-Mediterranean and Asia-US East routes, its impact on global trade and shipping is becoming more and more important.
Many ships made a detour to the Cape of Good Hope
According to the U.S. Energy Information Administration, nearly 1/10 of the seaborne oil trade is transported through the Red Sea route, and transportation disruptions could affect global energy supplies. German TV reported on the 17th that a large part of Europe's energy supply needs to pass through the Red Sea, and many palm oil and grains shipped to Europe also need to pass through this route. After the blockage of the Red Sea shipping lane, many ships had no choice but to make a detour to the Cape of Good Hope.
Since November 19, 55 ships have been diverted to use the Cape of Good Hope route between Europe and Asia instead of passing through the Suez Canal, the chairman of Egypt's Suez Canal Authority said in a statement last Sunday.
Zhong Zhechao told the "Global Times" reporter that the detour to the Cape of Good Hope is expected to go out of 7,000-10,000 kilometers more, and the time is about 7-10 days more, and the bypass of the Cape of Good Hope will not only bring an increase in shipping costs, but also increase more risks and uncontrollability for navigation safety and supply chain security.
The International Chamber of Shipping (ICS) has warned that the passage of ships from the Suez Canal to the Cape of Good Hope at the southwestern tip of Africa means higher sailing costs, more shipping days and delayed delivery times.
Vincent Starmer, a trade expert at the Kiel Institute for the World Economy in Germany, said: "If most ships are targeted by the Houthis in Yemen, the cost of transportation between Asia and Europe will definitely rise." "Shipping companies need to invest more in safety precautions. According to the maritime data agency Lloyd's Register, the cost of insurance for ships sailing in the Red Sea has now doubled.
Not only energy transportation, but also automobiles and other trade will be affected. Germany's Tesla news website reported on the 17th that in view of the heightened tensions in the Red Sea, Tesla electric vehicles have chosen an alternative route for sea transportation from China to Europe, that is, a detour to the Cape of Good Hope. Industry experts say the cost of transporting electric vehicles will increase by about 20% as routes are extended.
"Tensions are rising in Western countries"
Historically, the Suez Canal has been interrupted several times, resulting in lengthening the distance and pushing up freight rates. In March 2021, the cargo ship "Ever Given" ran aground in the Suez Canal, causing this shipping artery to be blocked for six days and causing serious losses. So, how big will the impact of this "Red Sea crisis" be?
Zhong Zhechao believes that the impact and duration of this "Red Sea crisis" will be far greater than the last Suez Canal blockage, and it will be two-way, and the duration is difficult to judge at present.
Xu Kai, senior engineer of Shanghai Maritime University and chief information officer of Shanghai International Shipping Research Center, said in an interview with the Global Times on the 18th that if this situation can be solved quickly, the impact on the market will be short-lived. If the suspension continues, many ports and corridors will experience congestion and detour costs, there may be a temporary shortage of market capacity, the balance between supply and demand in the market will also be broken, and there may even be a skyrocketing freight rate in 2021. It all depends on how long this extreme situation lasts at the moment.
Xu Kai further said that China has shown resilience in European shipping lines. Yemen's Houthi rebels frequently attack and harass Israeli-linked ships in the Red Sea, essentially targeting the United Kingdom, the United States and other countries behind them. From this point of view, China's merchant ships are relatively safe.
In response to attacks on ships in the Red Sea, the World Maritime Council said the escalating crisis was alarming and worrying, and called for decisive action to protect seafarers. "The right to freedom of navigation is a fundamental right under international law that must be guaranteed, and the time has come for resolute international action. ”
Sources, speaking on condition of anonymity, told The Guardian that the United States intends to form a naval contingent with other countries to patrol the Red Sea, the Bab el-Mandeb Strait and the Gulf of Aden. Warships from France and other countries are also currently patrolling the area to keep shipping lanes open.
On November 26, 2023 local time, Egypt, the American destroyer USS Carney passed through the Suez Canal. (Photo source: Visual China)
The Neue Zürcher Zeitung does not expect global supply chain disruptions similar to those seen during the pandemic. Vincent Starmer said: "There is currently a surplus of vessel capacity in the global container ship network, and the congestion situation around the world is generally much better than it was two years ago. "Consumers may not notice an increase in shipping costs for the foreseeable future. Stamer believes that even if the freight price increases significantly, it will not have a serious impact on the customer. However, tensions are growing in Western countries.