Schedule a Call Back
Red Sea attacks spark shipping disruptions, pose inflation risk
Industry News- Dec 25,23
Following the assault by Iran-backed Houthi militants on commercial vessels in the Red Sea, shipping companies are redirecting their cargoes, opting to sail around Africa instead of using the Suez Canal's shorter route.
Attacks in the Red Sea tied to the Israel-Hamas conflict are causing disruptions to shipping, leading to potential shipping delays and increased prices for goods. Following the assault by Iran-backed Houthi militants on commercial vessels in the Red Sea, shipping companies are redirecting their cargoes, opting to sail around Africa instead of using the Suez Canal's shorter route.
Bloomberg Economics analysts, including Gerard DiPippo, noted in a report that this rerouting will result in elevated shipping costs and longer delivery times. The Red Sea is a crucial global shipping lane, handling about 14% of the world's maritime trade. Economies most affected by these disruptions include Greece, Jordan, Sri Lanka, and Bulgaria, according to the analysts.
Over 20% of containers passing through the Suez Canal transport goods from Asia to European and Mediterranean nations, project44, a logistics intelligence firm, reported. The diversion around Africa is expected to add a minimum of seven to 10 days to the journey.
Despite the challenges, Bloomberg Economics suggests that the economic impact may be moderate. While shipping costs have risen since the end of October, they remain below the levels observed in 2021 and 2022 during the pandemic.
The impact on inflation in Europe is anticipated to be limited, as markets and shipping companies adapt to the new situation. Although Chinese exports have been weak, potential disruptions could exert downward pressure on that trade.
To address the security concerns, the US has established a task force, with the participation of countries such as the UK, Bahrain, Canada, France, and Italy. However, countries like Japan and China, which have military bases near the Red Sea, have not committed to participating in the naval effort.
Bloomberg Economics analysts acknowledge that the best-case scenario may involve shipping diversions for several months until the security situation in the Red Sea stabilises. While not the optimal situation, it is considered preferable given the current shipping capacity and potential alternatives.
Source: Bloomberg
Red Sea attacks
Suez Canal
Bloomberg Economics
Houthi
Greece
Jordan
Sri Lanka
Bulgaria
UK
Bahrain
Canada
France
Italy
Related Stories
Process Equipment
Johnson Matthey sells Catalyst Technologies biz to Honeywell for £ 1.8 bn
Following this sale, Johnson Matthey will be repositioned as a more focused and efficient business centred on its global Clean Air and Platinum Group Metal Services (PGMS) divisions.
Read moreRailways
Texmaco Rail eyes global growth after record FY25 in rail manufacturing
With a Rs 70 billion order pipeline, the company is scaling operations in India and abroad. The upcoming Global Capability Centre in Faridabad and Texmaco Rail’s export-led focus will enhance its ..
Read morePolicy Regulation
India–UK FTA: Major tariff cuts announced in historic trade pact
Automobile imports from the UK, which currently attract over 100% duty, will see tariffs reduced to 10% under a quota-based system.
Read moreRelated Products
Heavy Industrial Ovens
INDUSTRIAL SUPPLIES
Hansa Enterprises offers a wide range of heavy industrial ovens.
High Quality Industrial Ovens
INDUSTRIAL SUPPLIES
Hansa Enterprises offers a wide range of high quality industrial ovens. Read more
Hydro Extractor
INDUSTRIAL SUPPLIES
Guruson International offers a wide range of cone hydro extractor. Read more
latest News
Subscribe to iNoW
For Industry News on WhatsApp, Give a Miss Call on: +91 84228 74016
