International News: Trade disruptions including Houthi attacks in Red Sea and drought in Panama Canal to push shipping costs up this year

By Zoila Palma Gonzalez: Houthi attacks in the Red Sea and vessel restrictions in the Panama Canal due to drought are expected to elevate the costs of shipping products by sea.

According to CNBC, shipping costs are spiking as attacks in the Red Sea disrupt global trade, raising fears that inflation might pick up again if the disruption persists.

A report by S&P Global Market Intelligence said that the diversion of container ships from the Suez Canal around the Cape of Good Hope in South Africa is having a “global contagion” effect on freight rates.

In addition, trade between Asia and Europe has faced the largest impact with the Suez Canal serving as a crucial gateway between the two regions.
The rate for a 40-foot container from North Asia to Europe has surged more than 600% to $6,000 since the outbreak of the Israel-Hamas war in October, according to S&P Global Commodity Insights.

The Red Sea crisis is also having a significant impact with shipping costs between Asia and the U.S also spiking.

Shipping rates from North Asia to the U.S. East Coast have jumped 137% to $5,100 for a 40-foot container from early October, according to S&P Global.

 Rates from North Asia to the U.S. West Coast have jumped 131% to $3,700 during the same period.

This crisis in the Red Sea compounds the disruptions at one of the world’s other key trade arteries, the Panama Canal.

Drought caused by the El Nino phenomenon has led to reduced water levels, forcing the canal to restrict daily ship transit through the waterway.

Due to this situation, Maersk has established a land bridge across Panama for some cargo, avoiding the canal due to low water levels.

Some ocean carriers had originally rerouted trade from Asia to the U.S. East Coast away from the Panama Canal and through the Suez as an alternative. The attacks on vessels in the Red Sea are now forcing shippers such as Hapag-Lloyd to reroute Asia-East Coast trade around the Cape of Good Hope in Africa.

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