A potential resolution to the Red Sea shipping crisis has been announced after Houthi militants agreed to halt attacks on most Western vessels, contingent on adherence to the Gaza ceasefire. Attacks will continue on Israeli-owned ships or those sailing under the Israeli flag, according to the Humanitarian Operations Coordination Centre. However, the militants warned they would resume broader strikes if Yemen faces aggression from the US, UK, or Israel. This is reported by Designers Today.
Photo: Dreamstime.
The crisis, sparked by Houthi retaliation during the Israel-Hamas conflict, led ocean carriers to reroute ships around Africa's Cape of Good Hope, increasing transit times by 14 days and driving up container rates. Industry experts anticipate significant disruptions when Red Sea routes reopen. Peter Sand, of Xeneta, warned of "chaos" due to schedule imbalances, with carriers needing to manage overcapacity by scrapping vessels or implementing blank sailings.
In related developments, Drewry's World Container Index showed an 11% drop to $3,445 per 40ft container, remaining 67% below its September 2021 peak of $10,377. Freight rates from key routes, including Shanghai to Rotterdam and Shanghai to Los Angeles, also declined, attributed to lower demand during the Chinese Lunar New Year.
Table: Drewry.
Drewry anticipates that spot rates will continue to see slight declines in the coming week due to reduced demand following the Chinese Lunar New Year holidays.
Although industry observers expect container rates to fall further amid the resumption of Red Sea routes, challenges such as port congestion and excess capacity are anticipated. Freight broker Rachel Shames forecasted overcapacity-induced rate collapses, despite carriers' efforts to adjust supply.
The resolution of the Red Sea crisis offers the potential for improved shipping efficiencies, but analysts caution that the initial transition could disrupt global supply chains before stabilisation occurs.
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Drewry
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