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The logistics chief has issued a warning about the significant impact of the shipping crisis in the Red Sea.
Middle East World News

The logistics chief has issued a warning about the significant impact of the shipping crisis in the Red Sea.

Per Jan Hoffmann, Head of Trade Logistics at UNCTAD, the assaults are not just contributing to political tensions, but also increasing expenses and resulting in higher emissions of greenhouse gases (GHG).

He stated that the transportation of goods through the sea is vital for international trade. He spoke to reporters at the United Nations headquarters in New York through a video call from Geneva.

“These disruptions highlight their susceptibility to factors such as geopolitics, tensions, and climate changes.”

Attacks and counter strikes

Houthi rebels, also referred to as Ansar Allah, have dominance over significant regions of Yemen, including the coast of the Red Sea.

Since November, there has been an increase in assaults on ships traveling through the narrow waterways leading to the Suez Canal. The perpetrators have stated that their targets are ships bound for Israeli ports.

As a reaction, the United States, United Kingdom, and other nations carried out airstrikes on the group while at sea and currently on land, exacerbating tensions in the area.

A crucial link

The Suez Canal is an essential connection for global maritime transportation, responsible for approximately 12-15% of worldwide trade and 20% of container trade.

Global disruptions can have catastrophic consequences, as shown by the incident in March 2021 when the massive Ever Given cargo ship caused a cascade of problems by blocking the waterway for several days.

Due to the potential for attacks, ships are choosing to avoid this route and instead take the significantly longer journey around the southern tip of Africa.

According to UNCTAD, there has been a 67% decrease in the number of container ships passing through compared to last year. The biggest decrease is seen in LNG carriers, which have completely stopped since January 16th.

Before the crisis, on a typical day, two or possibly three gas carriers would travel through the area.

The worldwide shipping industry is experiencing a crisis.

The difficulties are a result of previous interruptions to international commerce caused by the Ukrainian conflict and the unusually low water levels in the Panama Canal as a result of the effects of climate change.

There has been a 36% reduction in ship transits due to low water levels, which is almost 62% lower than two years ago.

According to Mr. Hoffmann, the effects have been significant, citing a rise in average spot rates for containers.

The average shipping costs from Shanghai have significantly increased since early December 2023. Rates to Europe have more than tripled, and rates to the US west coast have also risen, despite not passing through the Suez Canal.

The speaker emphasized that we are experiencing various effects, and cautioned about the possibility of increased expenses, potential inflation, delays and disruptions on a global scale, and a exacerbation of factors contributing to climate change.