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Red Sea security fears cut container shipments through Suez Canal

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The number of container ships at the mouth of the Red Sea on their way to or from the Suez Canal was 90 per cent down in the first week of January compared with the start of 2023, according to research showing the disruption to world trade by attacks on ships by Yemen’s Houthi rebels.

The research, by the London-based shipping services company Clarksons, also showed that the number of container ships diverting from the Red Sea to travel round the Cape of Good Hope on January 9 was more than double the total as recently as December 21.

On the evening of Tuesday, the day the figures were compiled, Houthi rebels launched one of their biggest combined attacks on shipping so far. US Central Command said, with US and UK warships and aircraft shooting down 18 drones, two anti-ship cruise missiles and one ballistic missile.

No injuries or damage were reported in what the US said was the 26th attack on commercial shipping in the Red Sea since November 19.

Meanwhile, Germany’s Hapag-Lloyd, the world’s fifth-largest container line by capacity, indicated that it intended to continue diverting its ships away from the Red Sea towards the Cape.

Diversions via the southern tip of Africa add between 10 days and two weeks to each voyage between Asia and northern Europe. Shipping lines are also diverting some services between Asia and the US east coast that previously went via the Red Sea and the Suez Canal.

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Container ships are the main means of transporting manufactured and semi-finished goods across the world.

Stephen Gordon, head of research for Clarksons, said container ship arrivals in the Gulf of Aden, at the entrance to the Red Sea, had been at “very low levels” since mid to late December.

“Container transits [of the Red Sea] are remaining at low levels and transits round the Cape building,” Gordon said.

Hapag-Lloyd said it still deemed the passage through the Red Sea “risky and dangerous” and would continue to route its vessels around the Cape.

The accelerating diversions meant that the Shanghai Containerised Freight Index — a measure of the costs of moving a single, 40ft container on a series of long-haul routes — on January 5 reached its highest rate outside of the disruption caused by the Covid pandemic. The rise was driven by a doubling, from $1,667 on December 23 to $3,577 on January 5, in the cost of moving a container from Shanghai to Rotterdam. The cost of moving a box from Shanghai to Genoa also doubled, from $1,956 to $4,178.

Shipping lines have increasingly been deserting Red Sea and Suez Canal routes since late November. They have been deterred by missile attacks from Iran-backed Houthi rebels on vessels in the Red Sea that the Yemeni group insist have some link to Israel.

The Houthis are part of the Iran-backed “axis of resistance” to Israel and have launched the attacks in response to Israel’s war in Gaza. As recently as December 15, figures from Marinetraffic.com showed container ship traffic in the Red Sea was down nearly 30 per cent on the same day a year before.

The number of diversions has increased since an attack on December 30 on the Maersk Hangzhou, operated by Denmark’s AP Møller-Maersk. The attack shook shipping lines’ confidence that the US’s Operation Prosperity Guardian, meant to prevent Houthi attacks, would resolve the problem.

Simon Heaney, senior manager in container research at London-based Drewry Shipping, said the diversions had reversed a steady downward trend in freight rates since the end of Covid restrictions.

“For cargo owners, it’s adding time and cost and disruption,” Heaney said.

Disruption in European ports was also a risk if many delayed services all arrived close together, he added.

The Clarksons research found that, on January 9, there were 364 container ships, with a capacity of 4.2mn 20-foot containers (TEUs), operating on routes diverted via the Cape of Good Hope. The figure compared with 155 vessels, of 1.9mn TEU capacity, on December 21.





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