Red Sea attacks force rerouting of vessels, disrupting supply chains (updated)

Evergreen Marine Taiwan

18/12/2023 13:46

(Updates with Houthi claim of responsibility in paragraph 2,
effect on oil market, 5 , Evergreen not taking Israeli cargo and
avoiding Red Sea, 6-7)
       DUBAI, Dec 18 (Reuters) - Mounting attacks by the
Iran-aligned Yemeni Houthi militant group on ships in the Red
Sea are disrupting maritime trade as leading global freight
firms reroute around the Cape of Good Hope to avoid the Suez
canal.
        The group said it launched a 
    drone attack
     on a cargo vessel in the area on Monday, the latest in a
series of missile and drone strikes on shipping which it says
are a response to Israel's assault on the Gaza Strip.
  
        Several major freight companies -- including MSC -- have
begun to sail around Africa, adding costs and delays which are
expected to be compounded over the coming weeks, according to
industry analysts. About 15% of world shipping traffic transits
via the Suez Canal, the shortest shipping route between Europe
and Asia. 
    Combined, the companies that have diverted vessels "control
around half of the global container shipping market," ABN Amro
analyst Albert Jan Swart told Reuters. "Avoiding the Red Sea
will lead to higher cost due to longer travel time," Swart said.
    Oil major BP  BP.L  also temporarily paused all transits
through the Red Sea, a sign the crisis - which has mostly
affected goods freight until now - might broaden to include
energy shipments. Crude oil prices rose on those concerns on
Monday.
        The Houthi attacks were also forcing companies to
rethink their connections with Israel, with Taiwan's Evergreen
Marine   2603.TW  saying on Monday it had decided to temporarily
stop accepting Israeli cargo.
        "For the safety of ships and crew, Evergreen Line has
decided to temporarily stop accepting Israeli cargo with
immediate effect, and has instructed its container ships to
suspend navigation through the Red Sea until further notice," it
said in a statement.
  
    The war between Israel and Hamas, which began on Oct. 7, has
sent shockwaves through the region and drawn in the United
States and its allies on one side and Iran-backed paramilitary
groups in the Middle East on the other, threatening to cause a
broader conflict.
    The shipping attacks have prompted the United States and its
allies to discuss a task force that would protect Red Sea
routes, a move that U.S. and Israeli arch-foe Tehran has warned
would be a mistake.
    
    'SERIOUS THREAT TO INTERNATIONAL TRADE'
    U.S. Defense Secretary Lloyd Austin on Monday arrived for
talks in the region.
        Rico Luman, an analyst at ING, said the diversions were
adding at least a week of sailing time for container liners.
Typically, shipping goods from Shanghai to Rotterdam takes
around 27 days via the Suez Canal. 
  
        "This will at least lead to delays in late December,
with knock-on effects in January and probably February as the
next round will also be delayed," Luman said.
  
        While freight rates will likely increase on these longer
voyages too, carriers at the moment are seeking ways to utilize
excess capacity, said Zvi Schreiber, CEO of global freight
platform Freightos. 
    "It is unlikely that rates will spike to levels experienced
during the pandemic," said Schreiber, referring to the economic
effects of COVID-19 from 2020.
    Shipping stocks rose across European exchanges in morning
trading on Monday after a jump on Friday on bets the shift away
from the Suez Canal could boost rates. A.P. Moller-Maersk
 MAERSKb.CO  rose 3.5% in early trade in Copenhagen, before
paring some of those gains.
    The Suez Canal is an important source of foreign currency
for Egypt. Some 90% of world trade is transported by sea.
    The International Chamber of Shipping association said on
Friday that the Houthi assault on shipping lanes, which began
last month, was an "extremely serious threat to international
trade" and urged naval forces in the area to do all they can to
stop the attacks.

 (Reporting by Toby Sterling, Phillip Stewart, Jacob
Gronholt-Pedersen, Ben Blanchard, Alexander Cornwell, Helen
Reid, Jonathan Saul, Josephine Mason, Dubai newsroom; Writing by
John Davison; Editing by Elisa Martinuzzi and Toby Chopra)
 ((John.Davison@thomsonreuters.com;))