The Red Sea is now largely closed to traffic, affecting 8.8 million bpd of daily oil transit, and nearly 380 million tons of daily cargo transit. Global traffic now will be rerouted around Cape of Good Hope, adding on average 40% to voyage distance and even more in expense.

The collective vessel market share of MSC, Hapag Lloyd, and Maersk — each of which are recent victims to piracy attacks and have decided to totally suspend voyages via the Red Sea — is approximately 40% of global cargo trade. Transit times from Asia to the Mediterranean were at a threshold last month, and are now expected to rise up to an additional 10-14 days.

Meanwhile, global sea freight face additional risks in the Western hemisphere as drought conditions plague the Panama canal.

Sue Terpilowski of the Chartered Institute of Logistics and Transport, which represents companies concerned with supply chains, told the BBC about the likely spike in costs after four of the top five companies in the world suspended operations in the area:

“It’s security to the crew, to the ship itself and also insurance policies. Premiums are now going sky high if they can get insurance at all, so it’s going to have serious implications on stock levels, on costs and the whole dynamics of supply chains.”

The acceleration of de-globalization is leading to a surge of uncertainty along major global maritime routes and transport expenses.

⚓️ 🇺🇸 🚢 Traffic in the Red Sea is piling up between Sudan and Jeddah waiting for military action. - Sal Mercogliano

🔶️ We have now seen nearly all the major container lines and major oil tanker firms announce they will not transit the Babel Mandeb

🔶️ This means that the Houthi are currently strangling the most significant trade route on the planet.

🔶️ The Houthi are not the recognized government of Yemen, yet this non-state actor has completely disrupted the global supply chain.

🔶️ Even US-flagged ships that receive subsidies from @US_TRANSCOM @DOTMARAD, and contracted to carry @DeptofDefense cargo are refusing to transit the Bab el-Mandeb, even with US escorts for fear that their ships may be damaged, captured or sunk.

🔶️ This arguement by @MaerskLineLtd and @ARCships raises serious questions about the ability of sealift in a potential peer-to-peer conflict in the Pacific if they are concerned about the Houthi. This will alter any warplans set by @INDOPACOM @MSCSealift @US_TRANSCOM.

🔶️ Now we are witnessing a non-state actor - the Houthi - forcing the world's trade to divert from the most dense ocean trade route on the planet, because the ocean carriers have deemed it to dangerous

🔶️ We witnessed the impact of supply chain disruptions during COVID off the ports of LA/Long Beach.

🔶️ Now the ocean carriers, with power similar to the British East India Company of old, are mandating actions by the world governments and their military to make the seas safe.

https://gcaptain.com/shipping-giants-pause-red-sea-voyages/

📎 Sal Mercogliano