- In light of recent attacks on a key East-West trade route, numerous multinational shipping companies have started rerouting their vessels.
- Notably, the Suez Canal, a crucial conduit for oil trading, is being bypassed to prevent substantial time and cost implications associated with circumnavigating Africa.
- Companies like C.H. Robinson, CMA CGM, and Euronav have adjusted their sailings, with some suspending services via the Red Sea entirely.
- The recent disruptions underline the global interdependencies of the oil market, affecting key trading routes and igniting concerns of price escalation.
Emergent Reactions from Shipping Corporations
The targeted attacks have caused numerous shipping firms to reroute their fleets in December. Below, we chronicle their responses (ordered alphabetically) to the Red Sea crisis:
Relocation Strategies by Global Shipping Corporations
C.H. Robinson, a major player in logistics, announced on Dec. 22 that it had redirected over 25 vessels via the Cape of Good Hope in the past week, expecting this figure to surge.
It further noted an anticipated rise in “blank sailings and rate increases” over several trading sectors in the first quarter of 2024.
This French shipping corporation revealed a plan on Dec. 26 to gradually up the number of vessels sailing through the Suez Canal. Their decision rests on an exhaustive security assessment and their commitment to their sea workers’ security.
Prior to its recent decision, the company had rerouted various vessels via the Cape of Good Hope.
Euronav, a Belgian oil tanker company, announced on Dec. 18 its decision to steer clear of the Red Sea region indefinitely.
Evergreen, a Taiwanese container shipping corporation, announced on Dec. 18 that, while their regional ships traveling to Red Sea ports would set anchor in safe neighboring waters to await further instructions, their Red Sea-bound ships were already rerouting along the Cape of Good Hope.
Continued Caution by Shipping Lines
The Norway-based oil tanker group, Frontline, stated on Dec. 18 that its ships would avoid passing through the Red Sea and the Gulf of Aden.
Gram Car Carriers, a Norwegian shipping company specializing in pure car truck carriers, announced on Dec. 21 its decision to suspend the passage of its vessels through the Red Sea.
A vessel owned by shipping company Hapag-Lloyd suffered a drone attack off the Yemeni coast on Dec. 15 leading to no crew injuries.
HMM, a South Korean container shipping company, instructed its Europe-bound ships, normally sailing via the Suez Canal, to reroute via the Cape of Good Hope from Dec. 15 for an unspecified period.
Following the Norwegian Maritime Authority’s alert escalation for the southern portion of the sea, Hoegh Autoliners, a Norwegian shipping line, announced on Dec. 20 that it would cease Red Sea transit.
The Impact of the Crisis
The Danish shipping company, Maersk, has paused all sailings via the Red Sea for two days on Dec. 31, citing attacks on its container vessel by Houthi militants. An incident involving the Maersk Hangzhou led to the decision. On Dec. 27, they had planned for several dozen container ships to travel via the Suez Canal and Red Sea in the subsequent days and weeks.
Mediterranean Shipping Company (MSC), on Dec. 16, resolved that its ships would not pass through the Suez Canal, rerouting some via the Cape of Good Hope, following missile attacks on its vessel a day earlier.
Precautions Against Recent Developments
Similarly, the joint venture Ocean Network Express (ONE), involving Japan’s premier shipping corporations — Mitsui O.S.K. Lines, Nippon Yusen and Kawasaki Kisen Kaisha, declared on Dec. 19 that all ships would be rerouted to avoid the Suez Canal and Red Sea. In their strategy, vessels would either navigate around the Cape of Good Hope or temporarily halt their journeys in safer zones.
OOCL, a key player in container shipping based in Hong Kong, announced on Dec. 21 that their vessels had been directed to either change their course or suspend their sailings to the Red Sea. Once owned by Orient Overseas (International) Ltd, OOCL simultaneously halted cargo acceptance to and from Israel for an indefinite period.
Companies Monitor the Situation
Mitsui O.S.K. Lines and Nippon Yusen, Japan’s largest shipping lines have confirmed that their ships with Israeli links are avoiding the Red Sea. Alongside, they are also continually monitoring the situation.
Similarly, on Dec. 19, Wallenius Wilhelmsen, a shipping group from Norway, announced a cease in Red Sea transits until further directives. This decision to redirect vessels via the Cape of Good Hope adds an extra week or two to the voyage durations.
Lastly, Yang Ming Marine Transport, a Taiwanese container shipping corporation, announced on Dec. 18 that its vessels which would usually sail through the Red Sea and the Gulf of Aden would be rerouted via the Cape of Good Hope over the ensuing fortnight.
The ongoing development in shipping due to the dynamism of the Red Sea crises has significant implications for global trade, especially crude oil. This could potentially disrupt commodity markets and influence Forex trading, with implications for assets related to these markets.