Red Sea Crisis Affects Shipping Routes and Raises Europe-Asia Costs

World |Author: Diana Kavardzhikova | January 24, 2024, Wednesday // 11:00|  views

Logistic experts foresee serious consequences of the crisis in the Red Sea. The majority of world goods turnover is realized by sea transport. After a series of challenges in 2022-2023, including the Covid-19 pandemic, the lack of equipment and the Suez Canal blockage, at the end of 2023 - a new maritime transport crisis arose. It threatens world trade and negatively affects the economy.

Geopolitical tensions and attacks in the Red Sea forced ships to go around Africa, lengthening the trajectory and significantly increasing transportation costs between Europe and Asia. The height of maritime tariffs exceeds 200%, and experts predict the continuation of this trend, especially with the rising shipping volumes through Shanghai recently. The observed price increases are expected to exceed the additional costs of shipping lines, associated with the winds of Cape of Good Hope.

“Increases of maritime freights currently do not have a negative impact on the demand for transportation between Europe and Asia. Even on the contrary, more and more customers are requesting full containers and group shipments, concerned about potential delays in goods in the near future or even possible disruptions in deliveries“ shared Dimcho Dimchev, manager of the logistics company Cargo Partner in Bulgaria. ”At the moment, the extended route around Africa adds approximately 2 weeks to the sailing time of ships. Delays in ship schedules automatically result in a two-week backlog for empty containers returning from Europe to the Far East. In maritime transport it is extremely important to maintain the normal flow of cargo equipment and any disruption would lead to a critical issue in maintaining efficient operations” he further added.

The statistics show that approximately 390,000 TEU containers are transported each week from Europe and the eastern coast of the USA to the Far East, including both full and empty containers. Due to the bypassing of the route around Africa, a decrease of 780,000 TEU is expected, which will impact key ports before the Chinese New Year.

Experts believe that the lack of equipment issue may be resolved after the Chinese New Year, as delayed shipments from China will create a surplus of empty containers.

Until then, many sectors can benefit from rail transport, which is fast and reliable, providing a transit time of around 20 days from station to station, compared to the average 60-70 days by sea, according to experts from Cargo-Partner Bulgaria, based on their 20 years of experience in maritime transport to and from anywhere in the world.

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Tags: Red Sea, crisis, maritime, trade


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