The global supply chain has just recovered from three years of chaos, however, the Red Sea issue may cause chaos again. It is reported that in the name of solidarity with Gaza, Yemeni armed forces attacked merchant ships passing through the Suez Canal on the Red Sea route in early January. The Red Sea route is one of the most important commercial sea lanes in the world, involving 12% of global merchandise trade and one-third of container traffic. In the face of the attack on the Red Sea route, many major shipping companies have announced that the route is paralyzed and forced to bypass the Cape of Good Hope, which brings severe challenges to global trade.
Shipping companies are faced with difficult choices. If they choose the Red Sea route, they will bear the risk of being attacked by Houthi armed forces in Yemen and expensive insurance premiums. Choosing to bypass Africa can avoid the risk of attack, but it will increase the voyage of 10 days and more fuel costs, further aggravating the cost pressure of enterprises. This decision not only affects the recovery of the global supply chain, but also may lead to an increase in commodity prices, which will ultimately be borne by consumers.
The problem of shipping in the Red Sea has had a great impact on global trade, especially the automobile transportation industry. Shipping companies have suspended the Red Sea route, including MSC, the world’s largest container shipping company. The club of Spanish exporters and investors said that this problem may affect the trade of 135 billion euros between Spain and Asia, leading to a sharp increase in freight prices and a heavy burden on enterprises. This situation has once again aroused the concern of all parties around the world about supply chain and economic stability.
Post time: Jan-17-2024