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Danish shipping giant, Maersk, and scores of leading shipping companies have begun shipping via the Suez Canal weeks after they abandoned the pivotal route following numerous attacks by Houthi rebels.
On Christmas eve, Maersk announced it was preparing a return to the Red Sea, citing the deployment of a U.S.-led military operation to protect vessels against the attacks. On Wednesday, Reuters reported that the shipping giant had scheduled dozens of to traverse the Suez Canal, view the Red Sea.
Since Dec. 19, Maresk has rerouted ships around Africa via the Cape of Good Hope.
Last week, the company announced that it would add charges of $700 for a standard 20-foot container traveling from China to Northern Europe, consisting of a $500 peak season surcharge as well as a $200 transit disruption surcharge.
Since mid-November, Houthi rebels in Yemen have launched attacks on commercial shipping vessels in-transit via the lower Red Sea after Israel began its war on Hamas in the Gaza Strip. Ships traveling through the Red Sea and the Bab al-Mandab Strait have faced persistent attacks by the militants, greatly increasing risk for ships passing through the Suez Canal.
The Red Sea is the most significant waterway connecting Europe to Asia and east Africa and also one of the world’s most densely packed shipping channels. About 12% of global trade, including 30% of global container traffic, passes through the Red Sea. Dozens of companies have stopped shipping in the Red Sea and at the Suez canal. Some of the largest container-shipping companies, namely Maersk, Hapag-Lloyd, CMA, CGM and MSC, have paused or suspended their services in the Red Sea.
So far, the shipping disruptions have not significantly affected oil and gas prices.
Two weeks ago, Goldman Sachs told clients that LNG disruptions through the Suez Canal would have limited impact on the global markets but acknowledged that it would result in higher shipping costs for specific routes. Oil freight prices have already been impacted, with insurance war risk premiums having gone up fivefold from $2,000 to $10,000, while rates for booking a Suezmax to transport crude from the Middle East to Europe up 25%.
Meanwhile, the true economic costs of the disruption can be huge: Lloyd’s List has estimated that the Ever Given held up $9.6 billion in daily trade for the six days it was stuck in the Suez Canal.
By Michael Kern for Oilprice.com
Michael Kern is a newswriter and editor at Safehaven.com and Oilprice.com,