Due to the Red Sea crisis, 354 container vessels rerouted via Cape of Good Hope, accounting for 4.65 million TEUs or 16.4% of the global fleet, according to the latest Linerlytica report. This number, which is expected to grow, comprises 80% of all boxships moving between the Atlantic/Med basins and the Indian Ocean with most main carriers choosing to go by the Cape.
In contrast, only shipping company CMA CGM alongside few niche carriers have continued using the Suez route. This diversion is predicted to cause a capacity shortfall of up to 40% for departures from Asia to Europe and the US East Coast, leading to a surge in freight rates. The situation has impacted the availability of containers returning to Asia and caused a 20% price jump on new equipment.
Chapter 1: An Increase in Vessel Diversions due to the Red Sea Crisis
The Red Sea Crisis has necessitated a re-routing of 354 container vessels via the Cape of Good Hope, as reported by the most recent data up to January 7. This change in course, as depicted in the Linerlytica report, represents approximately 16.4% of the worldwide fleet, equivalent to 4.65 million TEUs.
A staggering 80% of all box ships traveling from the Atlantic/Med basins to the Indian Ocean have adopted this redirection. Given the current preferences of the chief carriers, this figure is expected to experience continued growth in the following week.
Chapter 2: Alternatives and Consequences in the Shipping Industry
With the exception of the French company CMA CGM and a few niche operators in the Asia-East Med and Baltic markets, the rest have shifted to the route through the Cape of Good Hope. Linerlytica reports suggest that for secure passage through the Red Sea, some marine carriers had to negotiate with Houthi forces stationed in Yemen.
The crisis will inevitably cause an anticipated capacity deficit of up to 40% for voyages from Asia to Europe as well as the US East Coast during weeks 4 to 6. As a result, Linerlytica predicts a consequent ramp-up in freight charges over the imminent weeks.
The comprehensive SCFI composite index has escalated by 97% from the onset of December, leaving scopes for further increases in the weeks to follow.
Similarly, this has impacted container availability for return trips to Asia. Container manufacturing has witnessed a sharp incline since December, and equipment costs have soared over 20% in the last month. Linerlytica has foreseen that the only reprieve will come from new vessel launches.