Ongoing conflicts in the Red Sea have created challenges for global shippers of essential goods, but this is just one of the many issues confronting major carriers as 2024 begins, Reuters highlights.
As informed, as a consequence, delays and increased costs are anticipated for major retailers such as Walmart, IKEA, and Amazon, as well as for food manufacturers like Nestle and grocers including Lidl.
This is seemingly the new normal – these waves of chaos that seem to rise and fall. Before you get back to some level of normalcy another event happens that sort of throws things out of whack.
..said Jay Foreman, CEO of Florida-based Basic Fun.
In 2024, potential risks include the expansion of attacks from the Red Sea to the Arabian Gulf, posing a threat to oil shipments. Additionally, escalating tensions between China and Taiwan could impact crucial trade lanes.
Furthermore, the ongoing war in Ukraine, which began in 2022, continues to affect the grains trade. While tankers carrying oil for Europe still pass through the Suez Canal, most container ships are rerouting goods around Africa’s southern tip due to attacks by Yemeni Houthis in the Red Sea, supporting the Palestinian group Hamas in their conflict with Israel in Gaza.
The diversion of container ships has led to increased fuel costs for ship owners, up to $2 million per round trip for Suez Canal diversions. The Asia-Europe spot rate has more than doubled from the 2023 average to $3,500 per 40-foot container.
Furthermore, the Governments of the United States, Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, New Zealand, Singapore, and the United Kingdom issued a statement on January 3, which condemns Red Sea attacks and calls for an end to the situation.