Container ships avoid the Suez Canal and take a detour through Africa
More than 100 container ships have been diverted from the Suez Canal to avoid Houthi attacks. The diversion of merchant ships to the Cape of Good Hope increases delivery times by 6,000 nautical miles and three to four weeks and has driven up oil prices.
More than 100 container ships have been diverted around South Africa to avoid the Suez Canal, in a sign of disruption to global trade. caused by Houthi rebel attacks on shipping off Yemen's west coast, The Guardian writes.
Shipping company Kuehne and Nagel said it had identified 103 vessels that had already changed course, with more expected to round the South African cape Good Hope.
The diversion adds about 6,000 nautical miles to a typical journey from Asia to Europe, potentially adding three to four weeks to delivery times for goods.
The Houthi rebels, who The Guardian says are linked to Iran, said attacked the ships in response to Israel's bombing of the Gaza Strip. Israel retaliates against attack by Hamas, which controls Gaza. The United States said Tuesday it will try to lead a naval coalition to protect shipping in the Suez Canal.
About 19,000 ships pass through the Suez Canal every year, making it one of the world's key routes, especially for transporting fossil fuels and goods between Asia and Europe.
According to Kuehne and Nagel, the vessels that have so far deviated from the route could have been carrying containers 1.3 m 20 ft (6 meters) long. Oil and gas carriers were also diverting from the shorter route, with BP becoming the largest company to publicly say so. Its rival Shell declined to comment.
The failure contributed to rising oil prices, the Guardian notes. The price of Brent crude futures, the global benchmark, rose 1.2% on Wednesday to above $80, after falling below $74 a week earlier. Further price increases could ultimately impact energy prices for consumers, increasing inflation.
Michael Oldwell, Kuehne and Nagel board member for maritime logistics, emphasizes: “Long time spent on the water is expected to absorb 20% of the world's fleet capacity, leading to potential delays in the availability of transport resources. Moreover, delays in the return of empty equipment to Asia are likely to create problems, further impacting the overall reliability of supply chains.”
Companies around the world, including several major automakers, are monitoring the situation to see if their supply chains could be affected. The last major unexpected closure of the Suez Canal occurred in March 2021, when a container ship was blocked for six days.
The latest disruptions will not impact retail this Christmas as inventories build up for weeks or even months ahead, but this means the goods are already in stores or warehouses in the UK, writes The Guardian.
But a prolonged disruption to normal supply patterns could eventually lead to shortages of products for consumers or parts for manufacturers, although there are few yet who reported any impact.
The outage coincided with a period when many factories were temporarily closed for Christmas, giving companies extra time to obtain critical supplies, Kuehne and Nagel emphasizes.
Some manufacturers have already moved from just-in-time supply chains that relied on prompt delivery of goods to a less efficient but more resilient “just in case” model with a large inventory of spare parts for unforeseen circumstances.