Global shipping is staring at serious disruption !
Ships taking the Suez Canal (34% of container traffic) have been attacked by Yemen-based Houthis!
Large shippers refuse to take that route.
Prashant Nair explains.
#globalshipping #Yemen #Houthis #redseaattacks #redseacrisis #seuzcanal #capeofgoodhope #cnbctv18 #businessnewstoday #businessnewsinenglish #sharemarkettoday
Read More:https://www.cnbctv18.com/business/suez-canal-crisis-impact-shipping-ge-shipping-container-rates-tanker-oil-prices-18597831.htm
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The global uh shipping Market is in a bit of a typ tight spot right uh and let me tell you why if you look at uh Global container volumes half of Asia’s shipping to North America as a region goes either via the Panama Canal or the
Sus Canal now a Panama Canal thanks to in part to the El Nino impact is suffering its worst drought since 1950 and hence there’s not enough water so throughput through that particular passage is actually quite limited so so it’s in any case because of these and other reasons for sometimes for some
Time being uh you know struggling it’s not being able to carry as many and let through as many ships as it used to do in the past the SE Canal approach meanwhile has now been attacked by Yemen based hoes leading to most large shippers refusing to ply that route uh
The world’s largest liner MSC has announced that it will reroot all Europe bound vessels via the Cape of Good Hope until further notice uh and you know other liners including musk CMA CGM Etc have also done the same actually the top four out of the top five global Shipping
Liners have done this now they are not taking or allowing their vessels to ply that route via the SE route now why is this important why is SE canal and that sort of you know Passage through so important sez actually serves 34% of the global container traffic Global
Container traffic that’s big almost more than onethird the Panama Canal actually serves 9% of the container traffic but it’s not just about containers the SE Canal also accounts for 8% of the total tanker flow which is stuff like oil Etc and 5% of the global dry bulk traffic
Coal IR or Etc meanwhile I mean if you look at the same uh numbers for the Panama Canal that accounts for 5% of the total tanker flow and about 2% of the total dry bulk so obviously look at these numbers the sez Canal has an outsized sort of contribution when you
Talk talk about the total flow both container and dry and wet cargo as well uh you might ask well you know so what’s the problem I mean there are other routs available why what’s the problem with going wi the Cape of Good Hope well the simple answer to that is that the voyage
Uh the time taken to sort of go through go you know between point a and point B why the sez the Panama or the why the Cape of Good Hope is it becomes much longer for example if you take uh you know sort of a ship going WIA between
Shanghai and New York uh you know the time taken is 17% longer and 34% longer via the SE canal and the Cape of Good Hope respectively as compared to the time taken via the Panama Canal against each of these the same also applies to uh trade routes between Asia and Europe
I mean for example The Voyage between Shanghai and Rotterdam that is the Netherlands is 32% longer via the Cape of Good Hope as compared to the seers canal and of course the SE is longer than the Panama basically the diversion away from the seers canal will will extend the voyage duration and hence
Removing a portion of effective capacity you need more ships to do the same same trips back and forth this essentially will lead to more stress on global supply chain at a time when many believe that inventories Global inventories have been depleted because of the onee plus kind of uh destocking cycle that we’ve
Been in uh have shipping rates moved moved yet the Shanghai containerized Freight Index this these are spot rates uh it’s been rising for three weeks in a row and it’s about 10% higher as compared to where it was uh towards the end of November uh this issue remains a
Potential threat remember to earnings of exporters andan actually even importers and also could prove inflationary for Commodities such as grains oil and so much more the implications I mean this is essentially the nerve center shipping essentially is the is is what gets stuff from point8 point B and the fact that we
Are seeing uh you know one big area which is the sez Canal passage area not functioning at the optimal levels actually not functioning at all now as far as commercial vehicles vessels are concerned I think uh is pretty big news and will need to be monitored pretty Closely
3 Comments
Doom
USA should have thought about all this before it vetoed cease fire..Germany ..UK ..France..were also responsible for this global senario..
They were stubborn ..they were not global players..shame
World War 3 now seems imminent and inevitable. Iran, via its proxies, the Houthis and other militants, has now declared an economic war against Egypt. The loss of revenue to Egypt from the Suez Canal losses will be huge.