Shipping costs rise by up to 250% due to Red Sea attacks

Live updates: Follow the latest news on Israel-Gaza

The cost of shipping goods through the Red Sea has surged since Yemen’s Houthi rebels began attacking commercial vessels in late November, and this continuing disruption may lead to higher inflation globally, industry analysts have said.

Charges for transporting a 40-foot container from China to Europe through the key waterway have surged to about $4,000 at present, according to the Drewry World Container Index, which tracks container freight rates on eight major routes to and from the US, Europe and Asia.

That is a 248 per cent jump from $1,148 from November 21, the week the attacks began, and a 140 per cent increase from $1,667 on December 23, data from London-based Drewry showed.

Some of the world’s largest shipping companies have been forced to suspend Red Sea routes and redirect their vessels.

These include Europe-based MSC, Maersk, CMA CGM and Hapag-Lloyd, and Asia-based Cosco Shipping, HMM and Evergreen Line, as well as oil and gas tanker operators.

The alternative route for East-West trade involves passage around the Cape of Good Hope at the southern tip of Africa, which increases the travel time between Europe and Asia.

“This strategic shift not only increases sailing times by 10-14 days but also adds additional fuel costs,” Rahul Sharan, senior manager for bulk research at Drewry, told media.

Some of the companies have imposed surcharges to cover additional expenses.

The rise in freight charges is not only due to the issues in the Red Sea.

A “panic” in China, owing to fears of insufficient shipping capacity to transport products before the Chinese New Year holiday, has also been pushing prices up, Mr Sharan said.

In addition, higher ancillary costs such as surcharges and insurance have also increased, so “logistically, this becomes a difficult situation”, Christian Roeloffs, co-founder and chief executive of Hamburg-based Container xChange, told media.