1.7 million TEU extra needed to cope with Red Sea blockade

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CONTAINER shipping lines could speed up vessels to make up for longer voyages, as they will require additional capacity to maintain services that typically used the Red Sea route, reports London’s Lloyd’s List.

Analysts say up to 1.7 million TEU additional capacity to will be needed to reroute all their services that normally use the Red Sea route via the Suez Canal following the Houthi attacks

Rerouting all containership traffic around Africa would soak up five to six per cent of global capacity, said Lars Jensen, chief executive of Vespucci Maritime.

However, given the current climate of overcapacity, this is certainly feasible, he said.

Mr Jensen said the box ship segment could require around 1.4 million – 1.7 million TEU additional capacity to overcome this challenge, as multiple container line services typically transit the Red Sea including Asia to northern Europe, Asia to Mediterranean, India to Europe and Asia to the US east coast.

“Drought in the Panama Canal means vessels on the Asia to US east coast route cannot use the [Panama] canal and this will result in more significant disruptions for such vessels,” said Mr Jensen.

He also noted how the “real” containership freight rate effect will not be felt until around four weeks’ time.

Containership freight rates on the Asia to the Mediterranean route have already risen by 20 per cent, according to Xeneta analyst Peter Sand.

Crucially, as highlighted by Mr Jensen, the latest disruption comes amid a “very different context” than for example during the Ever Given casualty of 2021, with freight rates much lower now. The attacks have also come during the typical low season for the east-west box trades.

Nevertheless, securing safe passage through the Suez will be the utmost priority.

“The worst case scenario for shipping would be the failure to get a coalition of navies to escort merchant vessels in the Red Sea,” said Mr Jensen.

Both analysts, however, expect box ships to make up for the longer route via the Cape of Good Hope by speeding up vessels, as, until now, the majority have been slow steaming with maximum speeds of no higher than 16 knots.

Rerouting vessels around Africa will likely add US$1 million to a large containership’s fuel costs, said Sand.

Eight containerships bound from Asia to Europe have been diverted via the Cape of Good Hope in the past few days.

A further eight large containerships are currently idling in the Arabian Sea having had their transit of the Red Sea cancelled, says Lloyd’s analysts.