The Red Sea is located at the junction of Asia and Africa, with the southern end connected to the Arabian Sea and Indian Ocean through the Strait of Mandela, and the northern end connected to the Mediterranean and Atlantic Oceans through the Suez Canal. The route through the Strait of Mandela, the Red Sea, and the Suez Canal is one of the busiest shipping routes in the world.Shipping company’s waterwayUsually, the Asia Europe route, especially the European route, mainly runs through the Red Sea channel, which is the main channel for Asia Europe maritime trade. According to the New Zurich newspaper, approximately 12% of global cargo transportation passes through the Red Sea and the Suez Canal.Since the outbreak of the new round of the Israeli Palestinian conflict, the Hussai armed forces have repeatedly attacked targets in the Red Sea using missiles and drones. In less than a month, approximately 16 ships of various types have been attacked and even detained. International shipping continues to be disrupted, and several shipping companies have recently announced a suspension of navigation in the Red Sea.Several shipping giants, including Mediterranean Shipping Company, DaFei Shipping Group, Maersk Group, and Herbert&Company, have suspended their container ships from sailing in the Red Sea and its adjacent waters. In addition, COSCO Shipping, Orient Overseas, and Evergreen Shipping have verbally notified the suspension of cargo loading on the Red Sea route. ONE Ocean Network Shipping has also verbally notified the suspension of cargo loading on the Red Sea route.At this point, major container shipping companies around the world have started or are about to stop operating the Red Sea Suez route.The London insurance market has also classified the waters of the southern Red Sea as high-risk areas. If a merchant ship needs to pass through this area, it must inform the insurer in advance and purchase additional war insurance.Under the current situation, multiple ships have already made emergency turns before arriving in the Strait of Mandate. At the beginning of the month, Linerlitica, an analysis firm in the container market, released a report stating that the probability of Red Sea vessels being attacked has increased, which may result in 30% of container fleets needing to change lanes.The International Chamber of Shipping has warned that avoiding the Suez Canal and bypassing the Cape of Good Hope at the southwest end of Africa for cargo ships will increase navigation costs, increase shipping days, and correspondingly delay delivery times.The industry is concerned that if the situation in the region further deteriorates, the diversion or suspension of ships will have a significant impact on the global supply chain. Analysts from Norwegian analysis firm Xeneta predict that based on the scale and duration of the interruption of the Suez Canal route, the increase in sea freight rates may reach up to 100%.This is also the first time that regional geopolitical conflicts have had a significant impact on China’s trade with Europe.A freight forwarder has stated that the purchasing level in Europe has decreased this year, with weak demand and a continuous decrease in freight rates. However, spot market freight rates have gradually increased since the end of November. On the 18th, we received news from the shipping company that the Far East to the eastern coast of the Mediterranean route has significantly increased. The freight rates of the Mediterranean route ZMP, exclusively operated by Star Line, will double in early January next year compared to late December this year. The freight rate to the northern port of Israel (HAIFA) has increased to $6800/FEU (40 foot long container), and the freight rate to the second largest port in western Israel (Ashdod) has increased to $7000/FEU.According to data released by the Shanghai Shipping Exchange, the freight rates on routes from China to Europe have continued to rise significantly. On December 15th, the freight rate (sea freight and sea freight surcharge) for exports from Shanghai Port to the European basic port market was 1029 US dollars/TEU, an increase of 11.2% compared to the previous period; The market freight rate (sea freight and sea freight surcharge) for exports from Shanghai Port to the Mediterranean base port is $1569/TEU, an increase of 13.1% compared to the previous period.
