Shipping disruption: troubled waters in the Suez Canal

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Shipping costs between Asia and Europe have risen sharply in recent months. From around USD 1,200 per container in November 2023, they soared to over USD 3,600 in January 2024. This is their highest level since the Covid pandemic.

In parallel, international shipping traffic has fallen dramatically. The approximate number of ships in transit fell from 70 to 40 between November 2023 and January 2024, reflecting a collapse in cargo volumes on the Suez trade route.


Sailing the Red Sea entails heightened risk since the end of 2023 following several Houthi rebel attacks on commercial ships navigating the waters. The situation has prompted decisions by some major shipping companies to avoid the Suez Canal by rerouting vessels via the Cape of Good Hope. Almost 30% of global container trade normally passes through the Suez Canal, which connects the Red Sea to the Mediterranean and is the fastest seaborne route for transporting manufactured goods from Asia and the Middle East to Europe.

This reroute extends the journey by one or two weeks, leading to a fall in shipping capacity and a rise in Asia–Europe shipping costs. That being said, these costs remain a far cry from the all-time highs reached in 2021 during the pandemic.


Written on Feburary 16, 2024. This is not an investment advice. Opinions subject to change.

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