News
The World Trade Organization (WTO) takes a deep look at the ongoing Red Sea shipping crisis and examines possible consequences on global trade in the section entitled “Analysis: The Suez Canal crisis” from the latest edition of its Global Trade Outlook and Statistics report, according to the Japan External Trade Organization (JETRO).
The Houthis have been attacking commercial vessels one after another in and around the Red Sea since November last year, urging shipping companies to avoid transiting through the Red Sea and reroute services to the Cape of Good Hope in South Africa. It has notably reduced the number of ships passing the Suez Canal.
The average number of weekly passages through the Red Sea plunged more than 45% in February, the WTO report says, while the monthly volume of shipments moved through the Suez Canal has fallen 54% in terms of metric ton. As a result, the number of passages around the Cape of Good Hope more than doubled in February, which has resulted in an extended travel time of 17 days on average.
The Suez Canal grounding in March 2021 lasted a week and occurred during the coronavirus pandemic when freight costs were already extremely high. In contrast, the Rad Sea crisis has been longer in duration but more limited in its impact on freight costs, with maritime shipping rates remaining well below those seen during the Ever Given grounding.
Roughly half the freight volume passing through the Suez Canal consists of containerized goods, the WTO report says, adding that approximately 10% of the freight volume crossing the canal consists of dry-bulk ships, and that tankers represent over 23%.
Freight rates from Asia to Europe have registered the greatest increase of 270% from February 2023, followed by those from Asia to North America rates, which have skyrocketed 240%, according to the WTO report. Current maritime freight rates are, however, still less than one-third of those seen after the Ever Given grounding or during the post-COVID recession and recovery in 2021 and 2022.
Dry-bulk freight costs increased sharply increased in December 2023 and March 2024, the WTO Report claims. On average, however, they remain 40% lower than those observed after the March 2021 grounding.
Freight costs for tankers have been on the rise since last September and remain more than twice as high as the levels seen during the grounding, the WTO report indicates. It reflects, in part, the disruptions caused by low waypoint transits in the Panama Canal due to drought and European operators exiting the Russian trade resulting from Russia’s invasion of Ukraine.
