Ships diverted from the Red Sea affect global trade
PORTS & SHIPPING

Ships diverted from the Red Sea affect global trade

Maximilian Hess is a principal at the political risk firm Enmetena Advisory, situated in London. Speaking during a webcast for supply-chain managers, the speaker highlighted strikes conducted from Yemen against commercial ships attempting to utilise the Suez Canal and stated that jury-rigged weapons had the power to reroute global trade. The effects on the economy are growing after the Houthis' ceaseless effort to denounce Israel's war in Gaza for almost six months. Major Asian ports are being overloaded by ships sailing around Africa's Cape of Good Hope due to their erratic timetables, which is causing shortages and pileups in certain areas. Freight charges are rising, and delivery times to the US and Europe is increasing. As the figures below demonstrate, a number of variables are to blame, including the strong US demand for commodities. However, the Red Sea diversions are mostly to blame for the most recent round of commercial unrest. Rerouting increased the average minimum transit time by 15% to northern Europe and by over 40% to the Mediterranean from Asia, according to a recent calculation by Sea-Intelligence, a maritime intelligence and advice company with headquarters in Copenhagen. In ports like Shanghai-Ningbo in China and Singapore, the ricochet effect of ships looping back to Asia is causing delays in their schedules. Because Jebel Ali is close to the Red Sea and serves as a significant trans-shipment centre for goods travelling via Dubai on both oceanic and land routes, it is also experiencing congestion in the United Arab Emirates. Singapore, home to the world?s second-biggest container port, issued a statement last week explaining how it?s experienced a significant increase in arrivals since the start of 2024, leading to an 8.8% rise in container volumes in January through April from a year earlier. Supply chain managers who pay for those services feel pressured to put orders further in advance as ships spend more time at anchor and travel longer distances. This may cause some managers to purchase more than they may need. According to Sea-Intelligence, the percentage of container ships that arrive on schedule has fallen to around 52%, reversing much of the gains made last year from pandemic-era lows of roughly 30% in early 2022. Because most ships on these routes avoid using the shortcut via the Suez Canal, delivery times are especially sluggish for products heading from China to Europe and the US East Coast. The US economy is exerting a significant draw on demand, as seen by the amount of imports via the Port of Los Angeles during the first four months of the year. An early read on May volumes through the nation?s busiest port shows the momentum is continuing, with three of the past four weeks coming in higher than year-earlier levels.

Lars Jensen, a shipping analyst and founder of Copenhagen-based Vespucci Maritime, mentioned that as more shippers initiate the peak season early, they cause a capacity shortage, which leads to increased rates. This, in turn, prompts other shippers to join the early rush, ultimately creating the congestion they had hoped to avoid. Spot shipping rates have responded to this trend by significantly increasing. Rogier Blocq, director of product development at the Amsterdam-based WorldACD, observed that air cargo rates from the Persian Gulf and South Asia into Europe had risen by almost 80% in May compared to the previous year, contrasting sharply with the average global rate increase of about 3% during the same period.

Maximilian Hess is a principal at the political risk firm Enmetena Advisory, situated in London. Speaking during a webcast for supply-chain managers, the speaker highlighted strikes conducted from Yemen against commercial ships attempting to utilise the Suez Canal and stated that jury-rigged weapons had the power to reroute global trade. The effects on the economy are growing after the Houthis' ceaseless effort to denounce Israel's war in Gaza for almost six months. Major Asian ports are being overloaded by ships sailing around Africa's Cape of Good Hope due to their erratic timetables, which is causing shortages and pileups in certain areas. Freight charges are rising, and delivery times to the US and Europe is increasing. As the figures below demonstrate, a number of variables are to blame, including the strong US demand for commodities. However, the Red Sea diversions are mostly to blame for the most recent round of commercial unrest. Rerouting increased the average minimum transit time by 15% to northern Europe and by over 40% to the Mediterranean from Asia, according to a recent calculation by Sea-Intelligence, a maritime intelligence and advice company with headquarters in Copenhagen. In ports like Shanghai-Ningbo in China and Singapore, the ricochet effect of ships looping back to Asia is causing delays in their schedules. Because Jebel Ali is close to the Red Sea and serves as a significant trans-shipment centre for goods travelling via Dubai on both oceanic and land routes, it is also experiencing congestion in the United Arab Emirates. Singapore, home to the world?s second-biggest container port, issued a statement last week explaining how it?s experienced a significant increase in arrivals since the start of 2024, leading to an 8.8% rise in container volumes in January through April from a year earlier. Supply chain managers who pay for those services feel pressured to put orders further in advance as ships spend more time at anchor and travel longer distances. This may cause some managers to purchase more than they may need. According to Sea-Intelligence, the percentage of container ships that arrive on schedule has fallen to around 52%, reversing much of the gains made last year from pandemic-era lows of roughly 30% in early 2022. Because most ships on these routes avoid using the shortcut via the Suez Canal, delivery times are especially sluggish for products heading from China to Europe and the US East Coast. The US economy is exerting a significant draw on demand, as seen by the amount of imports via the Port of Los Angeles during the first four months of the year. An early read on May volumes through the nation?s busiest port shows the momentum is continuing, with three of the past four weeks coming in higher than year-earlier levels. Lars Jensen, a shipping analyst and founder of Copenhagen-based Vespucci Maritime, mentioned that as more shippers initiate the peak season early, they cause a capacity shortage, which leads to increased rates. This, in turn, prompts other shippers to join the early rush, ultimately creating the congestion they had hoped to avoid. Spot shipping rates have responded to this trend by significantly increasing. Rogier Blocq, director of product development at the Amsterdam-based WorldACD, observed that air cargo rates from the Persian Gulf and South Asia into Europe had risen by almost 80% in May compared to the previous year, contrasting sharply with the average global rate increase of about 3% during the same period.

Next Story
Infrastructure Energy

Solar, Wind Bolster Thermal Power Amid Record Demand

This summer, solar and wind energy have significantly aided thermal power in meeting India's record power demand. On May 30, 2024, renewables provided 15% of the total power, with peak demand reaching 250 GW. The Ministry of Power highlighted the crucial role of solar and wind energy in meeting this demand during specific hours. Thermal power contributed 176 GW, with coal being the primary source, supplying 68% of the total power. South and North India were major contributors to renewable energy, with solar generating 421.19 MU, led by Rajasthan, Gujarat, and Karnataka. Wind energy generated..

Next Story
Infrastructure Urban

India Leads Indo-Pacific Economic Pact Signing

India, along with the United States and twelve other nations, has signed a significant economic pact aimed at bolstering cooperation and development across the Indo-Pacific region. This pact, signed by leaders from these countries, marks a crucial step towards strengthening economic ties and fostering regional stability. The agreement focuses on enhancing trade relations, promoting sustainable development initiatives, and addressing shared challenges such as climate change and infrastructure development. Key areas of collaboration include technology transfer, investment facilitation, and stra..

Next Story
Infrastructure Energy

Adani Commits $1 Billion to Sri Lankan Wind Projects

Adani Group has announced plans to invest over $1 billion in wind energy projects in Sri Lanka, marking a substantial commitment to bolster the country's renewable energy sector. This investment underscores Adani's strategic focus on expanding its presence in renewable energy across international markets. The proposed wind projects aim to enhance Sri Lanka's energy infrastructure, contributing to sustainable development goals by increasing clean energy capacity. Adani's initiative is expected to create employment opportunities and stimulate economic growth in Sri Lanka, while also fostering t..

Hi There!

Now get regular updates from CW Magazine on WhatsApp!

Click on link below, message us with a simple hi, and SAVE our number

You will have subscribed to our Construction News on Whatsapp! Enjoy

+91 81086 03000

Join us Telegram