Client Advisory: Red Sea vessel attacks - Suez Canal Update

February 12, 2024

Safe Passage through the Suez Canal still pending.

Crane Worldwide Logistics is keeping in close discussions with our core carriers relating to the ongoing turbulence in the Red Sea. 

Feedback is that the security situation in the Red Sea continues to deteriate, despite ongoing efforts to restrict the actions of the Houthi rebels. 

Furthermore, the situation remains volatile as air strikes in the region began, prompting major owners in all sectors to avoid the region. 

The majority of carriers are awaiting clear direction that the Red Sea sailings will have a safe passage, several stating that there is no expectation for routings to change in the next few months according to our discussions. 

Listen in to our latest Coffee with Crane episode: Top 5 ways the Red Sea turbulence will impact shippers - more here

UPDATE: 14th January, 2024

When will the Suez Canal situation be resolved?

In a recent article in the Financial Times, Maersk CEO Vincent Clerc stated "It's unclear to us if we are talking about re-establishing safe passage into the Red Sea in a matter of days, weeks or months... It could potentially have quite significant consequences on global growth".

As carriers are currently aligned in using the longer voyage around the Cape of Good Hope for Asia to Europe ocean freight traffic, the questions in the market relate to the long term consequences of the alternate routing and how long the situation in the Red Sea will continue.

The situation in the Red Sea continues to escalate as continuous attacks by Houthi rebels on ocean traffic increases risk on global supply chains. 

As highlighted by The Loadstar "equipment in Asia is in extremely short supply, due to the delayed backhaul voyages, and container release is being restricted to large-volume ‘VIP contracts’ or shippers prepared to pay a hefty premium".

Crane Worldwide's Mark Rhodes, Regional Ocean Product Director Asia Pacific highlighted similar concerns when speaking to CNBC last week. 

"The container shortage remains fresh in our memories from the COVID pandemic," Rhodes said. "The outbound leg from Asia to Europe is just the beginning of what could be more turbulent times ahead in 2024."

With ocean freight rates in turbulence and an increase in ambiguity around the return to a regular service operations via the Suez Canal, it is important that shippers work in partnership with their providers to identify risk not only in the short term, but also in the upcoming months. 

Please don't hesitate to reach out to your local representative to discuss options available to you, or you can reach out here, Crane Worldwide works in partnership with our clients for long term solutions.

January 5th, 2024

Suez Canal Update

There is mounting pressure in the Red Sea as commercial vessels passing via the Suez Canal are encountering ongoing attacks from Houthi Rebels. Countries such as the United States and United Kingdom have warned that there would be consequences should the attacks continue over the forthcoming weeks. 

Maersk, this week, announced that it would be avoiding the Red Sea area until further notice after a second vessel came under attack. 

The threat to seafarers navigating through the Red Sea is also of great concern therefore the question also becomes one of risk to lives as well as damage to cargo and vessels. 

Vessels from the majority of carriers are now being rerouted via the Cape of Good Hope adding substantial transit times to the voyage. 

In a joint statement issued through the White House’s briefing room on Jan 3 (US time), the 13 countries called for an end to the ongoing Houthi attacks, which are “illegal, unacceptable, and profoundly destabilising. There is no lawful justification for intentionally targeting civilian shipping and naval vessels,” the statement said.

Major news outlets are alerting end consumers to the impact of the additional transit time and its effect on companies around the world who are preparing for potential stock shortages. 

The Lunar New Year and factory closures could exacerbate the current situation. Dates available here

The Suez Canal is the shortest route between Europe and Asia. With limited accessibility at this time, a surge in rates from the carriers is ongoing given the turbulent situation. 

Alternative freight solutions are available to you. Please reach out to your representative at Crane Worldwide or get in touch here.

UPDATE: 29th December 2023

Turbulence continues in the Red Sea for shipping lines

The situation in the red sea, one of the world's core trade arteries. Major shipping companies continue to assess the current situation and are using alternative routing via the Cape of Good Hope to avoid risk factors including Hapag-Lloyd, Evergreen Line and MSC. 

"At the moment, we still consider the situation too dangerous to pass", a spokesperson for Germany's Hapag-Lloyd said in a statement. "We continuously assess the situation and are planning a review in the forthcoming week".

New Delhi’s defence officials vowed to bring those responsible to justice further to the recent attacks on two predominantly Indian-crewed merchant vessels amid the ongoing Houthi and Iranian missile and drone strikes in the Red Sea and beyond.

India’s assertive tone on the Red and Arabian Sea attacks comes after the attacks on MV Sai Baba and MV Chem Pluto, the latter of which was struck by a one-way attack drone only 200 nautical miles off the Indian coast.

A vessel was also struck by a missile earlier in the week. The vessel was MSC United VIII, an 8200 TEU vessel going from King Abdullah Port in the Red Sea to Karachi in Pakistan. There was no injury to crew and the vessel was undamaged. US CENTCOM reported that in a 10-hour period yesterday they shot down 12 attack drones, 3 anti-ship missiles and 2 land-attack cruise missiles in the southern part of the Red Sea. In addition, the Israeli air defense shot down an attack drone aimed at the port of Eilat. 

Whilst Houthi militants are attacking merchant ships as they sail past Yemen, about 7,200 miles to the west, the world’s other key waterway in Panama is being severely disrupted by drought. 

Hitting routes that handle almost 20% of trade, the issues are forcing vast detours by the global merchant fleet driving freight costs upwards. Panama diversions have been ongoing as low water levels restrict the number of transits through the canal. 

About 180 container ships have diverted around Africa or were stopped and waiting for instructions to avoid attacks in the Red Sea. Hundreds more are almost certain to join them in the foreseeable future until the level of risk subsides. 

Reach out to the team at Crane Worldwide Logistics should you require alternative solutions, we are here to help and look forward to the opportunity to discuss your options at this time. You can reach out here or via your local representative.

UPDATE 22nd December 2023

Long term implications of current disruption in the Red Sea

Empty container shortages are expected following the delays and diversions in the Red Sea, which could have longer-term ramifications for the supply chain as it heads into Chinese New Year. (You can see the dates here)

Expectations are that normal vessel rotations will nearly double because of diversions around the Cape of Good Hope. Carriers appear to have given up hope that the threat to vessels transiting the Red Sea will end any time soon and will continue to route vessels around the Cape of Good Hope costing time and money for shippers.

When combined with drought restrictions in the Panama Canal, the disruptions in the Red Sea amplifies the impact on global trade and highlight bottlenecks in global supply chains, which can have significant effects on various industries.

Over the last two years, the Ukraine war has largely exhausted Western arsenals of artillery shells and a host of short and long-range weapons, while authorities in both Kyiv and Moscow have struggled to find the troops and firepower to make good on planned offensives. Now, combating a sustained drone offensive from Yemen could ultimately exhaust the vital surface-to-air missiles Western warships rely on to defend themselves.

The Gaza conflict’s impact on shipping has well and truly extended beyond the local region after Malaysian prime minister Datuk Seri Anwar Ibrahim closed the country’s ports to vessels operated by Israeli carrier Zim. Mr. Anwar said an approaching Zim vessel, understood to be the Liberian-flagged Zim Europe, heading eastward and due to call at Port Klang on 26 December, would be turned away, as would any Israeli-flagged, owned or destined ship.

U.S., French and British warships have brought down dozens of attacking drones. The attacking drones cost an estimated $2,000 to $20,000 each, but the missiles the allied warships are using to bring them down may cost in excess of $1-2 million a shot.

Over the last two years, the Ukraine war has largely exhausted Western arsenals of artillery shells and a host of short and long-range weapons. Now, combating a sustained drone offensive from Yemen could ultimately exhaust the vital surface-to-air missiles Western warships rely on to defend themselves.

Crane Worldwide Logistics has a number of different options available to you to reduce transit times and cost during this period, please don't hesitate to reach out to your local representative or contact us here for further information. 

UPDATE 21st December

Oil Supplies may be distrupted due to Red Sea turbulence

BP will pause all tanker transits through the Red Sea, joining container carriers shunning the region after a spate of Houthi attacks on ships. Oil supplies may be disrupted if more tanker operators follow container lines in avoiding the Red Sea for crew safety. Brent oil futures rose on the news, according to reports.
Bloomberg reported that Europe’s headline natural gas price rose 7.9% on BP’s suspension, and that Asian shipping stocks rose ahead of expected increases in freight rates.
European container ports and forwarders are scrambling to obtain revised ETAs for vessels from Asia that have been re-routed around the Cape of Good Hope.

There is speculation that ships heading for North Europe may be instructed to increase speed to grab terminal slots ahead of their competitors.

At an average service speed of 18 knots, diverting around Southern Africa will add around 10 days to voyage times to North Europe.

Emissions are expected to increase significantly as vessels take the long route around southern Africa.

The route will add some 3,000 nautical miles to each voyage, with additional fuel consumption that could be more than 1,000. The situation is not favourable for ship emissions, with 3.15 tonnes of CO2 emitted for each tonne of fuel burned.

Sea-air providers are gearing up for a sudden rush in demand from shippers concerned at delays caused by vessels avoiding the Suez Canal, with fashion brands most likely to take up the offer.
While the air freight and air charter market has not yet seen any pick-up in demand from the situation, sea-air routes via Dubai are expected to see an increase.

Crane Worldwide Logistics has options available to you, please don't hesitate to reach out to your local representative or contact us here for further information.

UPDATE 20th December, 2023

Latest Information on operations in Red Sea

Carriers continue to accept bookings to Europe and the Mediterranean, however, shipments to the Red Sea are being declined.

Nearly all the carriers have advised that shipments will move the Cape of Good Hope. Those who have not provided the alternative routing confirm their operations are paused in the Red Sea.

The scheduled and expected GRI’s effective from January 1st on the Asia to Europe trade continue to be announced.

Crane Worldwide has not formally been advised of any additional surcharges to go via the Cape of Good Hope, nor any War or Emergency Risk Surcharges at this time. 

It is estimated that as much as 1.7M containership capacity could be required to cover the Red Sea rerouting.

Please be advised that If the current situation continues for a prolonged period, we could expect a shortage of equipment in Asia as the round trip increases significantly.

The situation continues to escalate, on Sunday one USS Warship shot down 14 drones with no ships damaged.

If you have any questions, please contact your local Crane Worldwide representative or reach out here to discuss alternative solutions.

Carrier operations paused in Red Sea passage

After a number of container vessels have come under attack, Maersk and Hapag-Lloyd have paused all Red Sea passages. The attacks are being made by Houti rebels in Yemen in protest to the war in Israel and Gaza.
The attacks are occurring in the Straits of Bab el-Mandeb, between the Gulf of Aden and the Red Sea. Whilst at first it was believed that only vessels with connection to Israel were being targeted, Houti rebels have since advised that all vessels are targets.
An MSC vessel was hit by a missile with little damage, Maersk has experienced a near miss. A Hapag Lloyd vessel has also been struck, resulting in a container being thrown overboard and deck fire, no crew members were injured. A Maersk vessel travelling south bound through the Red Sea has turned around.
If the channel is closed it will force carriers to divert vessels around the Cape of Good Hope, adding approximately 10 days in additional transit and cost.
The Red Sea channel represents 12% of global trade. If the passage is to close, the impact to cargo to and from Asia and Europe will be significant.
Carriers are monitoring the situation closely and working with Naval forces on the scene.
At this time there has been no news of an ERS (Emergency Risk Surcharge) and / or a WRS (War Risk Surcharge), however it can be expected. 
Crane Worldwide is monitoring the situation closely and identifying shipments on the water and their current position.
We will provide alternative ocean freight solutions and are offering air freight services for urgent shipments.
The situation will be updated on a daily basis. You can view the latest incidents as featured by UKMTO, United Kingdom Maritime Trade Operations here

If you have any questions, please contact your local Crane Worldwide representative or reach out here to discuss alternative solutions.

Request a Quote

Let one of our client advocates build a solution that fits your logistics needs.

+1 888-870-2726