Not hearing much about troubles in the Red Sea and Gulf of Aden as of late? You are not alone. It isn’t because there is nothing happening because there is. It just isn’t convenient news right now, but troubles are still abound. While the news of major shipping lines announcing in early 2024 that they were resuming Suez Canal transits made big news, the very same carriers suspending transits in April and May went unnoticed.
As a matter of fact, the bulk carrier vessel ‘Verbena’ was targeted off the coast of Yemen by the Iranian-backed Houthi rebels on Thursday, June 13th, 2024, last week. The Verbena took hits from two missiles. By Saturday, the ship sent out a distress call, and the crew had to abandon the ship because they could not get the fires under control.
The UK Navy reported Wednesday last week another vessel was attacked on June 12th, 2024; the vessel, the 750-foot-long ‘Tutor,’ was hit by two water drones in the Red Sea near the Suez Canal, according to data collected by Bloomberg. Houthi militants claimed responsibility.
Reported on June 10, 2024, by U.S. Central Command (CENTCOM) that in the 24 hours prior to the report, Houthi missiles had hit two separate vessels, the German-owned ‘Norderney’ and the Swiss-owned ‘Tavvishi’; both vessels were damaged and needed assistance.
The result of the Houthi rebels running amok is a 70% reduction in Suez Canal traffic as compared to the beginning of December 2023. The reduction will continue to put upward pressure on rates and transit times. Container rates have been climbing since the beginning of May 2024 and are forecast to keep rising for the time being. While the Houthi rebels are not the only reason for rising rates, they are a factor. The more vessels that have to sail around the Cape of Good Hope to avoid the Suez Canal, the more capacity is taken off the water making the extended transit.
Ocean carriers are warning their customers that transit times, charges, and vessel schedules will remain fluid and unpredictable due to re-routings and congestion. While many African ports are performing admirably with the increased traffic of vessels avoiding the Suez Canal, others are strained resulting in congestion. And like any good traffic jam, chain reactions are set off causing congestion in many ports throughout the world, including Asia. Shippers should prepare for higher rates and delayed container deliveries. If you have not ordered your imported Christmas inventory yet, you are really, really, late. Typically, when supply lines are strained, the risk of physical damage to cargo increases. Now is not a good time to forget getting cargo insurance for your shipments and last minute planning.
There is a slight bright side on the horizon. The Panama Central Authority announced it intended to increase the number of vessels allow through the Panama Canal from the lower 22 of last year to 34 per day starting in July 2024. That is only four vessels less than the pre-drought averages. Panama’s wet season runs from December through April and the El Nino weather pattern ending aided in better water levels. While Panama being able to raise the canal vessel count won’t solve the global congestion and price increase, it will help. Any good news in our current environment is good to hear.