Red Sea Crisis: New reduction in trade ship crossings after slight stabilization

The number of containers transported through the Suez Canal and Canal declined again in February compared to January, according to the German Institute for World Economy (IfW), intensifying the crisis caused to international shipping by the Huthi rebels’ attacks. At the same time, due to the crisis in the Red Sea, the number of ships around the Cape of Good Hope off Africa tripled. However, no negative effects are expected for the economy as a whole or for the German economy in particular, as both fare prices to Europe and the volume of goods arriving in the North Sea are stabilising. This results from the latest update of Kiel’s commercial index. The algorithm analyzes the world position data of container ships in real time. About 40 container transport ships are currently travelling daily through the Red Sea, compared to an average of well over 100 ships last year. The current number of ships is near the low point of mid-January, having recovered in the meantime on about 50 ships. This means that the fall in maritime traffic in the Red Sea following the attacks of the Huthi rebels has not yet been clearly halted. However, the consequences for North Sea ports are mitigated, according to IfW. Initially, the abrupt interruption of the usual sea route through the Suez Canal led to delays for incoming ships, as they had to make unscheduled diversions about two weeks around the Cape of Good Hope on the coast of Africa. In December and January, about 25% fewer ships docked in Hamburg and Bremen as well as in the ports of Rotterdam and Antwerp, which are important to Germany. In February, the gap closed to about 15%, with the port of Bremen rising even by 2%. The report is the weekly average for 2023. Freight prices for transporting a standard container from China to Northern Europe, which previously traveled through the Suez Canal, are stabilising. They have left their peak behind just under $6,000 per standard container in mid-January. Since then, the spot price has been falling constantly and is currently around US$4,500. The diversions around the Cape of Good Hope, which many ships now follow to avoid the Suez Canal, apparently also increase traffic in the world’s oceans. Maritime companies could now develop more ships in order to continue to secure tight routes in ports, highlights the German think tank. The number of container vessels travelling to the sea daily increased slightly by 0.3% from January to February and today amounts to about 5,450 container vessels. ‘Even if the total financial consequences are management: The re-interruption of known trade routes in the Strait of the Red Sea meets a sensitised mood for geo-economic risks and dependencies,” says Julian Hinz, director of research and head of Kiel Trade Indicator at the Kiel Institute. “But we should always keep this in mind: Germany and Europe are so economically prosperous because they are open economies that prosper from trade. Therefore, it must be diversification and not isolation. All of this advocates diversification of supply chains and trading partners in order to reduce dependence on individual suppliers, countries and trade routes.”