2024 has not kicked off well for the shipping industry. The main problem has been the hostilities in the Red Sea with Houthi rebels attacking ships indiscriminately.

This has caused most major companies to divert their ships around the Cape of Good Hope. The re-routing of these vessels adds 6,000 nautical miles to the journey and between three and four weeks to delivery time.

The result of such a diversion is very costly for everybody. The shipping companies are having to rewrite their schedules because of the longer time that the Cape route takes and shipowners’ costs could be as much as $1 million extra in fuel alone for the longer route. At the time of writing the Asia-Europe spot rate has more than doubled from 2023’s average to $3,500 per 40 teu container.

Inevitably these costs will have to be passed on to the consumer. Delivery of oil is also badly affected which can only lead to a price rise in that essential commodity.

Another implication of the Houthi attacks is that cruise ships will also have to avoid the Red Sea. Currently there are many ships on their annual world cruises and almost all of them were intending to use the Suez Canal. Re-programming a cruise at the last minute is enormously difficult and fare paying passengers are likely to miss many ports that they had hoped to visit.

The Suez Canal is another loser with revenues from transits dropping considerably.

Bad as it is, the most important thing is to keep our ships and their crews as safe as possible regardless of cost.