Houthi attacks prompt massive rerouting of container ships

Over 100 container ships have been redirected around southern Africa to avoid the Suez Canal due to Houthi rebels attacking vessels on Yemen’s western coast.

Kuehne and Nagel has identified 103 ships that changed course, with more expected to divert around the Cape of Good Hope, adding about 6,000 nautical miles to their journey, potentially adding three or four weeks to product delivery times.

The Houthi rebels, aligned with Iran, claim to have attacked ships in response to Israel’s actions in Gaza. Israel is retaliating against an attack by Hamas, which controls Gaza. The US announced plans to lead a naval coalition to protect shipping in the Suez Canal.

About 19,000 ships navigate the Suez canal every year, making it one of the world’s key routes, particularly for fossil fuels and goods moving between Asia and Europe.

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The ships that had diverted so far had the capacity to carry 1.3m 20ft (6-metre) containers, Kuehne and Nagel said. Oil and gas tankers have also diverted, with BP the biggest company to publicly state that it has done so. Its rival Shell declined to comment.

The disruption, with ships diverting around southern Africa, has impacted global trade, contributed to higher oil prices, and may lead to further increases, potentially affecting consumer energy tariffs and adding to inflation concerns.

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The price of Brent crude oil futures, the global benchmark, rose by 1.2% on Wednesday above $80, having fallen below $74 a week earlier.

Michael Aldwell, Kuehne and Nagel’s board member for sea logistics, said: “The extended time spent on the water is anticipated to absorb 20% of the global fleet capacity, leading to potential delays in the availability of shipping resources. Moreover, delays in returning empty equipment to Asia are likely to pose challenges, further impacting the overall reliability of supply chains.”

Global companies, including major automakers, are closely monitoring the situation to assess potential impacts on their supply chains. The most recent significant and unforeseen closure of the Suez Canal occurred in March 2021, lasting six days, when the Ever Given container ship obstructed the passage.

The current disruption is unlikely to impact the retail industry this Christmas, as stocks have been accumulated weeks or even months in advance, with products already present in stores or UK warehouses. However, an extended disturbance to regular shipping patterns could potentially lead to shortages of products for consumers or parts for manufacturers in the future, although few have reported any immediate effects.

Notably, this disruption aligns with a period during which many factories temporarily shut down for Christmas, providing some additional time for companies to receive essential supplies.

Some manufacturers had previously transitioned from “just-in-time” supply chains, relying on prompt arrivals of goods, to a more resilient “just-in-case” model, incorporating additional emergency stockpiles of parts.

Source: The Guardian