Egytrans and Links Investment form a strategic joint venture in Saudi Arabia  

Egytrans and Links Investment form a strategic joint venture in Saudi Arabia  
Egytrans and Links Investment form a strategic joint venture in Saudi Arabia  

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Jeddah - Yasmine El Tohamy - DUBAI: Mounting attacks by Yemen’s Houthis on ships in the Red Sea are disrupting maritime trade as leading global freight firms reroute around the Cape of Good Hope to avoid the Suez canal.

Multiple “projectiles” were fired from Houthi-controlled territory on Monday at a vessel in the southern Red Sea, US officials said.

The Houthis have launched a series of missile and drone attacks on ships in the area, which it says are a response to Israel’s assault on the Gaza Strip.

However, there was no immediate claim of responsibility for the latest attack.

Several major freight companies — including MSC and Maersk— have begun to sail around Africa, adding costs and delays which are expected to be compounded over the coming weeks, according to industry analysts. About 15 percent of world shipping traffic transits via the Suez Canal, the shortest shipping route between Europe and Asia.

Combined, the companies that have diverted vessels “control around half of the global container shipping market,” ABN Amro analyst Albert Jan Swart told Reuters. “Avoiding the Red Sea will lead to higher cost due to longer travel time,” Swart said.

Oil major BP has also temporarily paused all transits through the Red Sea following the attacks over the weekend.

The shipping attacks have prompted the US and its allies to discuss a task force that would protect Red Sea routes.

US Defense Secretary Lloyd Austin on Monday arrived for talks in the region.

Rico Luman, an analyst at ING, said the diversions were adding at least a week of sailing time for container liners. Typically, shipping goods from Shanghai to Rotterdam takes around 27 days via the Suez Canal.

“This will at least lead to delays in late December, with knock-on effects in January and probably February as the next round will also be delayed,” Luman said.

While freight rates will likely increase on these longer voyages too, carriers at the moment are seeking ways to utilize excess capacity, said Zvi Schreiber, CEO of global freight platform Freightos.

“It is unlikely that rates will spike to levels experienced during the pandemic,” said Schreiber, referring to the economic effects of COVID-19 from 2020.

Shipping stocks rose across European exchanges in morning trading on Monday after a jump on Friday on bets the shift away from the Suez Canal could boost rates. Maersk rose 3.5 percent in early trade in Copenhagen, before paring some of those gains.

The Suez Canal is an important source of foreign currency for Egypt. Some 90 percent of world trade is transported by sea.

The International Chamber of Shipping association said on Friday that the Houthi assault on shipping lanes, which began last month, was an “extremely serious threat to international trade” and urged naval forces in the area to do all they can to stop the attacks.

Taiwanese container shipping line Evergreen said on Monday that it has decided to temporarily stop accepting Israeli cargo with immediate effect and instructed its container ships to suspend navigation through the Red Sea until further notice.

Evergreen added that ships on regional services to Red Sea ports will sail to safe waters nearby and wait for further notification, while container ships which are scheduled to pass through the Red Sea will be rerouted around the Cape of Good Hope to continue their voyages to destination ports.

France’s CMA CGM said it had ordered all its vessels to leave the area and stay there until further notice.

“The situation continues to deteriorate and there are increasing concerns about security,” it said.

As per Hapag-Lloyd, which controls about 7 percent of the global container ship fleet, it will “pause all container ship traffic through the Red Sea until Monday. Then we will decide for the period thereafter.”

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