Customer Advisory - Shipping Lines to avoid Suez Canal due to attacks from Yemen's Houthi rebels increase and the market outlook

Because of the escalation in missile and drone attacks by Houthi rebels on merchant shipping on passage to and from the Suez Canal, some global shipping companies have halted journeys through the Red Sea b. Maersk, Hapag-Loyd, MSC and CMA CGM have stopped transiting the Suez Canal after last Friday's attacks against Maersk and Hapag-Loyd's vessels.

With the situation deteriorating daily, shipping lines will increasingly look to re-route vessels around the Cape of Good Hope, rather than transiting the Suez Canal. Right now, we have already received announcement from THE Alliance that one of their MD3 vessels YM WONDERLAND 023W will take an alternative route around the Cape of Good Hope considering the recent security concerns in the Red Sea.

This will add some 10 days to the westbound voyage time of an Asia-North Europe loop, significantly squeezing the already tight pre-Chinese New Year supply and causing freight rates to spike.

And on the transpacific, although the reduction in the daily number of transits allowed via the Panama Canal may be eased a little due to better-than-expected rainfall. The number of daily transits in January will still be low at 24, comparing with normal 34-36 vessels daily which still delay the shipment passing Panama Canal. Carriers were rerouting the vessels via Suez Canal in the concern of the delay but now the Suez Canal issue has increased the uncertainty and instability in the shipping service plan.

For TPEB services, we so far haven't received formal notification from the carriers for the corresponding actions and service change against the Suez Canal issue. However, we may see the cost of moving freight by ocean may further increase and space will  get tighter to WC due to cargo switch, depending on the scale and duration of any disruption at the Suez Canal.

Without the smooth operation, the domino effect of damage and disruption to supply chains caused by ships delayed will be substantial. It's suggested to early plan your shipment and keep more lead time under these uncertainties.

Once we have more detailed information from carriers, we will keep you posted immediately. If you have any question, please feel free to contact your sales representative. Thank you.