Main Ports in Germany Experience Price Increases
Container xChange, a leading platform for container leasing and trading, has reported significant week-on-week price increases in some of the main ports in Germany. This surge is believed to be a direct result of the exodus of shipping companies from the Red Sea. The ongoing attacks by Yemen’s Iran-backed Houthi militants have prompted major shippers to reroute their vessels, causing trade disruptions worldwide.
Anticipation of Container Scarcity
Container xChange CEO Christian Roeloffs has expressed concerns regarding the anticipated container scarcity in Europe. As the region receives import containers from the Middle East, India, Southeast Asia, and China, the rerouting of vessels away from the Red Sea is expected to lead to an increase in container prices and market instability. Freight rates have already experienced a consistent surge, with a spot rate increase of 20% to 30% on major East-West corridors, according to a report by Xeneta.
Shippers Avoid Red Sea, Fear Higher Oil and Gas Prices
Several major shippers, including Hapag Lloyd, MSC, Maersk, and BP, have announced their decision to avoid the Red Sea due to the ongoing attacks by Houthi militants. The repercussions of this move are significant, as Greece has now advised its shippers to follow suit. Greek shipowners control approximately 20% of the world’s commercial vessels, which will further escalate the trade disruptions.
Industry Impact and Consumer Costs
Maritime industry expert John Konrad highlights the far-reaching consequences of Greece’s decision, stating that it will influence global trade routes, energy supply, and even food security. Container xChange has warned its clients that the operational costs of shipping will increase, resulting in a surge in costs for Europe-bound energy supplies, palm oil, and grains. These increased costs will eventually be passed on to the consumer.
Duration of the Situation Raises Questions
The industry is now grappling with the question of how long this situation will persist. Is it merely a temporary disturbance or a long-lasting issue? The diversion of container vessels around the southern tip of Africa due to the inaccessibility of the Suez Canal is adding further strain. The duration of these disruptions will greatly impact the global trade landscape.
International Mission Countering Houthi Attacks
In response to the attacks on commercial vessels in the Red Sea, Defense Secretary Lloyd Austin has announced the creation of Operation Prosperity Guardian. This international mission involves multiple countries, including the U.K., Bahrain, Canada, France, Italy, and others. The objective is to counter the Houthi rebels’ attacks and ensure the safety of commercial shipping in the region.
Houthi Vow to Continue Attacks
Despite the formation of Operation Prosperity Guardian, a Houthi official has stated that the group will continue to target ships in the Red Sea as long as Israel remains involved in the conflict in the Gaza Strip. The official clarified that only Israeli ships or those heading to Israel will be targeted.
Naval Forces’ Role in Ensuring Security
The lingering question remains as to when naval forces, particularly from Egypt, Great Britain, France, and the U.S., will take control of security in the Red Sea. Roeloffs points out the challenges of forming convoys, which could impede traffic, and the difficulty in detecting drone boat attacks in high-traffic areas like the Red Sea.
Overall, the trade disruptions caused by the exodus of shipping companies from the Red Sea are having a significant impact on global trade. As the situation continues to develop, the industry is bracing for further challenges and uncertainties.