Container ships carrying consumer goods from Asia to Europe are being forced to sail around the entire African continent to avoid the precarious Red Sea, adding over a week to transit times and causing shipping costs to skyrocket.
The longer voyages are necessary due to growing instability and pirate attacks in the Gulf of Aden and the Red Sea area. There have been over 75 attacks this year alone, with multiple large cargo ships being hijacked. Insurance providers are pressuring shipping companies to avoid what they deem an active high-risk area.
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Taking the traditional route through the Suez Canal is the quickest and most affordable decision. However, more and more freight carriers are deciding the extra 7-10 days of sailing is worth it to circumvent the dangers in the Red Sea corridor.
These prolonged journeys around southern Africa are causing massive delays in the supply chain, resulting in rising expenses for shipping companies and end consumers. Expert estimates show costs have increased between $10,000 to $15,000 daily for each rerouted vessel.
For example, the journey from Shanghai to Rotterdam along the normal Red Sea route takes approximately 33 days. The alternate route going around Africa takes 45 days, adding nearly two extra weeks. Container ships typically carry over 10,000 20-foot containers on board. Having these goods stuck on ships for longer periods has ripple effects across supply and demand.
Besides increased fuel usage and seafarer wages, the shipping firms also deal with bottlenecks and traffic jams at ports that are ill-equipped to quickly unload these gigantic vessels when they all suddenly start arriving via the detour route. All these expenses add up and are passed along to customers.
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The Chief of Maersk, the world’s biggest shipping organization, noted they caused $750 million in extra costs last year only from dodging regions plagued by privacy. Industry specialists say the typical buyer could see the cost of unfamiliar merchandise rise by 10%, assuming the hijackings and unreliable circumstances keep hampering direct delivery paths.
The circumstance uncovers the weakness of worldwide supply chains. Analysts say better security and anti-privacy measures will be expected to balance out the Red Sea district, which fills in as a crucial sea exchange crossing. However, the additional days at sea permit crew to keep away from sharp waters, and costs will keep taking off so long as ships cannot confidently sail the route through the Suez Canal again.
