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More than 100 container ships rerouted from Suez canal to avoid Houthi attacks

More than 100 container ships rerouted from Suez canal to avoid Houthi attacks
Jasper Jolly Wed 20 Dec 2023
Cape of Good Hope diversion adds 6,000 nautical miles and three or four weeks to delivery times and has driven up oil prices

More than 100 container ships have been rerouted around southern Africa to avoid the Suez canal, in a sign of the disruption to global trade caused by Houthi rebels attacking vessels on the western coast of Yemen.

The shipping company Kuehne and Nagel said it had identified 103 ships that had already changed course, with more expected to go around South Africa’s Cape of Good Hope.

The diversion adds about 6,000 nautical miles to a typical journey from Asia to Europe, potentially adding three or four weeks to product delivery times.

The Houthi rebels, who are aligned with Iran, have said they attacked ships in response to Israel’s bombardment of Gaza. Israel is retaliating against an attack by Hamas, which controls Gaza. The US said on Tuesday it would try to lead a naval coalition to protect shipping in the Suez canal.

About 19,000 ships navigate the Suez canal every year, making it one of the world’s key routes, particularly for fossil fuels and goods moving between Asia and Europe.

The ships that had diverted so far had the capacity to carry 1.3m 20ft (6-metre) containers, Kuehne and Nagel said. Oil and gas tankers have also diverted, with BP the biggest company to publicly state that it has done so. Its rival Shell declined to comment.

The disruption has contributed to higher oil prices. The price of Brent crude oil futures, the global benchmark, rose by 1.2% on Wednesday above $80, having fallen below $74 a week earlier. Further price increases could eventually feed through to consumer energy tariffs, adding to inflation.

Michael Aldwell, Kuehne and Nagel’s board member for sea logistics, said: “The extended time spent on the water is anticipated to absorb 20% of the global fleet capacity, leading to potential delays in the availability of shipping resources. Moreover, delays in returning empty equipment to Asia are likely to pose challenges, further impacting the overall reliability of supply chains.”

Companies around the world, including several large carmakers, are monitoring the situation to work out if their supply chains could be affected. The last big unexpected closure of the Suez canal came in March 2021, when the Ever Given container ship blocked passage for six days.

The latest disruption will not affect the retail industry this Christmas, because stocks are built up weeks or even months in advance, meaning products are already in stores or in UK warehouses.

An extended disruption to normal shipping patterns could eventually cause shortages of products for consumers or parts for manufacturers, although few have reported any effects so far.

The disruption has coincided with a period in which many factories shut down temporarily for Christmas, giving some extra time for companies to receive crucial supplies.

Some manufacturers had already switched from “just-in-time” supply chains that relied on goods arriving promptly, to a less efficient – but more resilient – “just-in-case” model with more emergency stockpiles of parts.