Last updated September 10th, 2024
Summary:
- Major ocean carriers continue to avoid the Red Sea into peak ocean season, meaning increased transit times for peak season goods.
- Vessel types most disrupted by the attacks are container, followed by tankers and bulk vessels.
- Volume through the canal remains low. Despite peak season, August of 2024 saw an 68% reduction compared to 2023.
- Southeast Asia to the US East Coast has a 47% increase to transit time and a 33% increase to Europe. China to Europe has seen a 25% increase to transit time.
- Sailing schedules are still seeing delays of 5-7 days but have improved by 4 days since February.
Yemen Group Houthi Continues to Target Commercial Vessels
The Houthi rebel group continues to significantly impact global supply chains with ongoing attacks on commercial vessels in the Red Sea. Currently, a crude oil tanker, Sounion, is burning in the Red Sea following one such attack, which poses a severe ecological threat if oil spills into the sea.
Despite military defense efforts from multiple countries, including the United States, the Houthi group remains undeterred, and the attacks show no sign of resolution after over ten months. Major carriers continue to avoid the region to mitigate risks.
Volume through the Suez Canal
Since the attacks began in late 2023, hundreds of vessels across major carriers have rerouted to avoid the Red Sea, leading to historically low volumes through the Suez Canal. Despite the peak season for ocean shipments, August saw only 155 container vessels passing through the canal, a 68% decline compared to August 2023. This trend is expected to continue, with carriers likely to reroute around Africa or use the Panama Canal until tensions in the Red Sea are resolved.
The chart below expands on the impact across various vessel types and their frequency through the canal.
While container vessels are the most affected, they are not the only ones rerouting to avoid the Red Sea. There has also been a significant decline in bulk vessels and tankers. Tankers, in particular, often carry hazardous materials, such as crude oil, which pose substantial environmental risks in case of attacks. General cargo vessels and Ro-Ro vessels have not been as severely impacted, but these vessel types already constitute a smaller portion of the traffic through the Suez Canal.
Impacts to Transit Times
As vessels divert to avoid the Red Sea, transit times have increased by an average of 7–10 days for lanes that traditionally pass through the canal. The charts below show the median transit times on major routes, as recorded monthly through August.
With the peak shipping season underway, median transit times have surged to approximately two months. Southeast Asia, a key exporter of electronics, clothing, accessories, and footwear, is particularly affected. Shipments to the U.S. East Coast now take 47% longer, while shipments to Europe take 33% more time to arrive. Transit times from China to Europe, another major source of consumer goods, have risen by 25%. Please note that shipments from China to the U.S. East Coast have not been affected, as they typically transit through the Panama Canal rather than the Red Sea.
Retailers preparing for the holiday season must adjust their ordering schedules to accommodate these extended transit times. Failing to do so can result in shortages in stock and time sensitive freight arriving too late to sell, causing an influx in inventory levels.
European ports Antwerp, Hamburg, and Rotterdam have felt the effects of the Red Sea tensions most acutely, with transit times from Asia increasing by around two weeks. In the U.S., ports such as Savannah and Norfolk have seen transit times rise by 5–9 days. While shipments to the U.S. East Coast have the option to transit via the Panama Canal, offsetting some of the delays, European carriers have fewer alternatives. Unless equipped to use the Arctic route, most carriers must rely on the Suez Canal, further exacerbating delays.
The vessel schedule reliability chart below tracks how late containers in transit are expected to be based on updates in schedules.
While carriers have become better at predicting sailing schedules along the Cape of Good Hope route, performance remains lower than before the rerouting. Longer transits mean more opportunities for delays due to factors such as weather and port congestion. In August, carriers experienced a median delay of 5–7 days, though this marks a 4-day improvement since February.
Historical Trade Through the Suez Canal:
The Suez Canal was opened in 1869 to connect the North Atlantic Ocean to the Indian Ocean through the Mediterranean and Red Seas. Since then, it has become an integral trade route for global supply chains and saves 7-20 days of travel that would be needed for vessels to go all the way around Africa. Interruptions to the flow of vessels can have major impacts to trade as demonstrated in 2021 when a stuck vessel halted operations for six days.
With safe passage through the canal hindered, delays on this route have continued. The United States has seen some relief with the droughts impacting capacity through the Panama Canal lessening, giving a better option than around Africa, but Europe in particular continues to feel the full force of vessels being unable to pass through the canal.
Concern for Safety of Front-Line Seafarers
While project44 has made it a priority to provide frequent updates on the Red Sea crisis, the safety of the crew members on these ships remains top priority in these challenging times. They and their families are in our thoughts.
Summary
The ongoing Houthi rebel attacks on commercial vessels in the Red Sea have drastically impacted global shipping routes, particularly through the Suez Canal, leading to significant delays and disruptions. Carriers have been forced to reroute vessels, resulting in increased transit times of up to 47% on key trade lanes, especially those connecting Asia to Europe and the U.S. The rerouting has hit European ports the hardest, while the U.S. East Coast has seen less disruption due to the Panama Canal offering an alternative route. As tensions continue, the safety of front-line seafarers remains paramount, while the global supply chain faces ongoing uncertainty.
