Over 100 container ships were rerouted around southern Africa to avoid the Suez Canal as Houthi rebels attacked vessels on the western coast of Yemen, disrupting global trade. According to The Guardian, Kuehne and Nagel, a shipping company, identified 103 ships that had changed their routes, with more expected to go around South Africa's Cape of Good Hope.
The diversion has added about 6,000 nautical miles to the Asia to Europe journey, extending the delivery time by three to four weeks for products. The 192 km Suez Canal is the quickest sea route between Asia and Europe.
Around 19,000 ships pass through the Suez Canal annually, establishing it as one of the world's vital passages, especially for the transportation of fossil fuels and commodities between Asia and Europe.
Houthi rebels have claimed responsibility for attacking ships in response to Israel's airstrikes on Gaza. The conflict, which started after a surprise attack by Hamas in Israel on October 7, has led to hundreds of deaths in Gaza. The United States announced on Tuesday its intention to lead a naval coalition to safeguard shipping in the Suez Canal.
Kuehne and Nagel stated that ships that were diverted had the capacity to carry 1.3 million 20-foot (6-metre) containers. Additionally, oil and gas tanker routes have also been redirected, with BP being the largest company to publicly announce it had changed course.
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Michael Aldwell, Kuehne and Nagel’s board member for sea logistics, told The Guardian, "The extended time spent on the water is anticipated to absorb 20% of the global fleet capacity, leading to potential delays in the availability of shipping resources. Moreover, delays in returning empty equipment to Asia are likely to pose challenges, further impacting the overall reliability of supply chains."
The canal is one of seven geographic choke points that are critically important to world oil trade and are also susceptible to blockages or pirate attacks. The disruption has played a role in driving up oil prices. Brent crude oil futures, the global benchmark, surged by 1.2% on Wednesday, surpassing $80, after dipping below $74 just a week before. Continued price hikes might eventually affect consumer energy costs, potentially contributing to inflationary pressures.
Last week, two missiles that were fired from a territory held by Houthi rebels missed a commercial tanker loaded with Indian-manufactured jet fuel near the key Bab el-Mandeb Strait.
Businesses, including major car manufacturers, are closely monitoring the situation to assess potential impacts on their supply chains, reported the news outlet.
However, this disruption isn't expected to impact the retail industry this Christmas as stocks are accumulated weeks or months ahead, ensuring products are already available in stores.