Many shipping companies avoid the Red Sea and the Suez Canal by diverting their ships around the Cape of Good Hope. The bypass leads to delays and additional costs, and the disruption of supply chains affects global trade. This is stated in an article by DW, writes UNN.
Iranian-backed Houthi rebels in the Arabian Peninsula have been attacking cargo ships in the Red Sea since Israel launched a military operation in the Hamas-controlled Gaza Strip in October. Already 27 attacks have been reported. As a result, many shipping companies have halted traffic through these waters and diverted their ships to the much longer route around the southern tip of Africa.
The Red Sea, which connects the Indian Ocean to the Mediterranean Sea via the Suez Canal, is a vital trade route, accounting for up to 12% of world trade, but freight traffic on this important route has dropped significantly as a result of Houthi attacks. According to the Kiel Institute for the World Economy (IfW), in December 2023, "the volume of containers transported by this route has more than halved and is now almost 70% below normally expected volumes.
It is noted that the route along the Cape of Good Hope increases the delivery time from Asian producers to Europe to 20 days.
This, as DW writes, has already had its first negative consequences - to-day, for example, electric car manufacturer Tesla announced that it would suspend production at its Grünheide plant in the German state of Brandenburg for two weeks from the end of January, citing a "shortage of components".
Shipping companies incur millions of dollars in extra costs. The world's largest shipping company, Maersk of Denmark, explained to DW that the extra kilometers are always expressed in relation to a round trip. These, he said, amount to "about 10-12 days per one-way voyage - that is a round trip of about three weeks - and up to another 7,000 kilometers," which increases the cost of each voyage by about 50 percent.