Anyone looking to move a container full of belongings from Shanghai to Rotterdam will be paying a lot more in the near future. From where? Problems continue in the Red Sea.
Yemeni Houthi rebels have repeatedly attacked ships in one of the most important sea lanes for world trade in recent weeks. The Houthis say they only attack Israeli-linked ships because they want to punish Israel for the war in Gaza. In practice, it is impossible to predict which ships they will attack and which they will not.
And so major container shipping companies began to avoid the shipping route. Shipping companies such as Maersk and MSC will soon sail their ships around the Cape of Good Hope, at the southernmost point of Africa.
This leads to significant increases in container transportation. Market figures from ING show that the price of transporting a standard 40ft container between Shanghai and Rotterdam was still averaging 1,063 euros at the end of November. This is now 1,513 euros and therefore more than 40 percent higher. The global container price also increased by 20 percent during this period.
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The increase is due to surcharges imposed by major shipping companies to cover routing costs. “There are about 6,000 more kilometers beyond the Cape of Good Hope. “This will easily take ten days,” says industry economist Rico Luman of ING.
Major Danish shipping company Maersk charges an additional fee of over 600 euros for container shipping from China to Northern Europe. The French CMA CGM also charges hundreds of euros extra.
“This means that container prices are not yet close to the peak prices during the Corona crisis,” says Luman. “But this is a clear turning point. “And it doesn’t look like this vulnerability will be resolved quickly.”
On Monday, US Secretary of Defense Austin announced international measures to ensure the security of the trade route. There are many NATO navy ships in the region. The Houthis said Wednesday they would retaliate if they come under American fire.
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
