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The ongoing ripple effects of Red Sea shipping disruptions [1]

['Customer Communication Manager']

Date: 2024-07-09

Resilience The ongoing ripple effects of Red Sea shipping disruptions Helene Hofman Customer Communication Manager Helene Hofman Share LinkedIn Facebook Twitter Email Copy link WeChat

Over six months have passed since the Red Sea tensions began, and the ripple effects on maritime shipping and global supply chains have intensified. Ships continue to be temporarily diverted around the Cape of Good Hope, significantly increasing transit times and operational costs. Regular service reconfigurations and volume changes have put pressure on infrastructure, contributing to port congestion, delays, and capacity and equipment shortages. At the same time, demand for container shipping has remained strong. The latest of the Beyond the Box podcast looks at the global effects of the Red Sea shipping disruptions. In this article, you can learn more about the repercussions and what they mean for businesses and consumers around the world.

The fallout of the Red Sea tensions Before the attacks began towards the end of 2023, 12% of global trade passed through the Suez Canal. Recent figures show that the number of ships crossing through the canal has plummeted by 66% since carriers began temporarily diverting their vessels around Africa. “In today's shipping, anybody who shoots at a ship is shooting at the world,” Jan Hoffman, Head of Trade Logistics at United Nations Conference on Trade and Development (UNCTAD) told Beyond the Box. “The situation continues. The spare capacity has been eaten up. And all routes are affected, not only the ones going through the West, unfortunately.” The situation has caused many challenges, including:

Increased transit times - Going around Africa via the Cape of Good Hope has increased cargo travel distances by an average of 9%. As a result of these longer routes, more ships are needed to transport the same amount of cargo.

Increased costs – Taking the longer route to avoid the Red Sea and Suez Canal results in increased costs for carriers and businesses. More time, fuel, and resources are needed to account for the longer routes, and the costs of shipping has risen.

Capacity shortages – With ships tied up on extended voyages, the number of ships available to transport cargo is significantly reduced. It is estimated that available capacity was down between 15% and 20% in the second quarter of 2024.

Lack of certainty – The ongoing situation has increased uncertainty for global supply chains. Extended transit times and port congestion have significantly affected reliability.

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[1] Url: https://www.maersk.com/insights/resilience/2024/07/09/effects-of-red-sea-shipping

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