The Bab el-Mandeb Strait is the gateway to the Suez Canal and the Mediterranean from the south. It is located at the mouth of the Red Sea and is the third most important global “bottleneck”, a bottleneck that has become the only transit point for ships from around the world. The war between Israel and Hamas has reached the point where 12 percent of global trade and 16 percent of goods imported to Italy pass through. Houthi attacks from Yemen and supported by Iran targeted “Israeli-linked” ships passing through the strait, disrupting one of the key centers of world trade and provoking a military response from the USA and the UK.
If ships want to reach the Mediterranean by avoiding Suez, they have no choice: They have to circumnavigate Africa from the Cape of Good Hope, with additional navigation time of 10 to 15 days and higher costs, as data and testimonies show. Collected from the shipping industry by Today.it. Its impact on major Italian ports is already visible; The worst consequences for prices are on the horizon and could send Italy and Europe back to the economic uncertainties and new inflation caused by Russia’s invasion of Ukraine.
Houthis are dragging the Red Sea into crisis: The situation is already worse than Covid
The negative impact of the Red Sea crisis on global trade has already exceeded the impact of the pandemic. Only the giant cargo ship “Ever Given”, which closed the Suez Canal for six days in March 2021, performed worse. With this exception, “the Red Sea crisis is the biggest event, even bigger than the initial impact of the pandemic.” ” says Alan Murphy, CEO of Sea-Intelligence, one of the leading logistics consultancy companies in maritime transportation.
According to updated data of the International Monetary Fund’s Portwatch platform processed by Today.it, maritime traffic in the Suez Canal in January 2024 decreased by more than 37 percent compared to the same period last year, and in the Bab el Strait by 52 percent. Mendeb. In comparison, the alternative route around the Cape of Good Hope, which circumnavigates Africa, increased by 70 percent. The collapse of commercial ship traffic in the Red Sea in favor of the alternative route is clearly seen in the graph below.
Example: On January 21, 2024, 46 ships passed through the Suez Canal. On the same day in 2023, this number was 73. The US and the UK have carried out numerous military attacks against the Houthis in Yemen, with the support of Australia, Bahrain, Canada, the Netherlands and New Zealand. But commercial ships remain targets of the rebels. Italy will also be in the Red Sea with a European naval mission. According to the latest data collected by multinational logistics company Kuehne + Nagel, 215 ships currently traveling with 2.7 million containers have already been forced to change route.
Fears of the shipping industry Maersk: “Costs increased by 50 percent”
Maersk is one of the most important Danish companies in the world. Contacted by Today.it, the company said shipping costs for the alternative route to Suez around Africa had increased by 50 percent due to a journey of more than 6,000 kilometers, the equivalent of 3,280 nautical miles (on the map below).
In its latest update, Maersk described the situation in the Red Sea as “extremely unstable and all available information confirms that the security risk remains significant.” Concerns abound in the industry: The majority of importers for small and medium-sized businesses are concerned about the impact of the crisis on trade routes and the resulting cost increases, according to a survey conducted by Freightos, a digital freight booking platform for international shipments. .
Assarmatori and Federagenti: “We are afraid of the duration of the crisis and the Chinese New Year”
In Italy, the industry is being cautious about forecasts and looking ahead to the coming weeks, especially the implications of the Chinese New Year. As every year (you can see it by the red dots in the chart below), the celebrations in China will reduce the number of containers in circulation as demand increases as containers remain occupied longer on new routes. So shipping costs can only increase.
“We act by sight, and an emergency situation with the characteristics of the current situation makes any predictions impossible, even in the short term,” Assarmatori president Stefano Messina told Today.it. Tensions in the Red Sea and the Strait of Hormuz have had limited effects on the Italian system: oil and gas prices are stable and the same applies to raw material and freight rates for both dry cargo and liquid cargo transportation. There are increases in freight rates in container transportation, especially for imports from the Far East. “If this crisis continues, the problems could certainly become more serious.”
Federagenti President Alessandro Santi described the situation as “still too uncertain and variable to formulate forecasts or describe analyzes regarding the final prices of goods.” Indicators for the rise in prices of raw materials and energy products are certainly starting to move dangerously Consumer products and those destined for large-scale distribution may experience a domino effect as routes are extended and shipping times are constantly readjusted due to the Chinese New Year, which hampers activities in China for weeks. “Delivery may be subject to incremental impacts, both in terms of unavailability of certain categories of goods and price increases.”
Italian ports suffer: Shipping costs 4 times more from Shanghai to Genoa
The impact of the Red Sea crisis is already evident in Italian ports. According to data from the Portwatch platform processed by Today.it, traffic in the six largest national ports (Venice, Trieste, Genoa, Gioia Tauro, Augusta and Livorno) decreased, with a peak of over 20 percent compared to November. As can be seen from the chart below, the peak was reached at the end of December, with approximately 21 percent fewer ships than in the previous month.
Although there has been a gradual recovery as of January 2024, the number of ships is still 11 percent lower. Why are there fewer ships in Italian ports? Because those that need to arrive via the Suez Canal are delayed due to the longer journey around Africa. The extra time spent by ships at sea brings with it new and higher transportation costs.
The latest data provided by analytics firm Drewry says the cost of moving a typical container from Shanghai to Genoa has more than quadrupled, from $1,400 to $6,365. The Ligurian route has become the most expensive route in Europe: as a result, Northern European ports may become more attractive than Italian ports; This fear has already been expressed by various representatives of the industry.
Prices rose again: 95 million euros of damage per day
Maritime transport via the Red Sea involves more Italian imports than exports, or about 16 percent of the total, according to Bank of Italy estimates. The majority of purchases from China go through this route, while other goods come from East Asian economies or Persian Gulf countries that export gas and oil.
Among the sectors most affected is fashion: a third of Italian imports in the supply chain come from the Red Sea, but quantities are also high in metalworking products, which account for almost 30 percent of Italian imports. Some regions are more at risk than others: The highest value of goods transported across the Red Sea for Confartigianato is Lombardy with 12.9 billion euros, followed by Emilia-Romagna with 9.4 billion euros, Veneto with 5.7 billion euros and Tuscany with 5.7 billion euros. 4.7 billion, Piedmont 4.2 billion and Friuli-Venezia Giulia 2 billion.
The damage is already there: according to Confartigianato’s calculations, Italy has lost 3.3 billion euros in the last 3 months due to failed or delayed exports and 5.5 billion euros due to the inability to supply manufactured products. Almost 9 billion losses in total: They make over 95 million euros every day.
There is now a fear that everything will fall on consumers. Ispi, the International Institute for Political Studies, calculated that a similar shock could increase prices by 1.8 percent in Italy and Europe. Everything will depend on the duration of the crisis and the possible response of the European Central Bank: a major new element of uncertainty for 2024.
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Source: Today IT

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.