SUEZ Canal diversions will inflate container shipping costs for as long as the situation lasts, but trade always finds a way, says London's drewry Maritime Research.
Nonetheless. the duration of the crisis is the key unknown variable. 'We think carriers won't resume Suez Canal transits until a time when the risk of attack has been eliminated, which seems more like months than weeks away,' said Drewry analysts in an article in Hellenic Shipping News Worldwide.
'While those of us who work in the shipping and logistics world like to champion its critical role in the global economy, it is entirely understandable that it mostly exists in the shadows, given that everything usually works as it should in an understated manner,' said the article.
'However, two prominent risks to container shipping (and all other shipping sectors for that matter) have sadly become real, and have put shipping back into the limelight,' the article said.
'The first risk emanates from geopolitical factors, exemplified by carriers deciding to avoid the Red Sea and the Suez Canal following a series of attacks on ships by Yemen's Houthis in support of Hamas in the war with Israel.
'Simultaneously, the second risk arises from the spectre of climate change, here exemplified by the Panama Canal reducing its capacity in a bid to preserve levels in the canal's watershed.
'The realisation of these twin risks has created a metaphorical pincer move that threatens to overturn all of Drewry's previous predictions about the container market's direction and balance of power.
'It is important to state that neither canal is formally closed, but faced with a very real physical danger to crew and assets (Suez), and capacity restrictions and potential operational delays (Panama), carriers must quickly decide if the risk is worth it, and if not, plot a new course asap.
'There was some flip-flopping, but as of today the vast majority of container services have stuck with the original decision to take the long way around the Cape of Good Hope,' Drewry said.
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Nonetheless. the duration of the crisis is the key unknown variable. 'We think carriers won't resume Suez Canal transits until a time when the risk of attack has been eliminated, which seems more like months than weeks away,' said Drewry analysts in an article in Hellenic Shipping News Worldwide.
'While those of us who work in the shipping and logistics world like to champion its critical role in the global economy, it is entirely understandable that it mostly exists in the shadows, given that everything usually works as it should in an understated manner,' said the article.
'However, two prominent risks to container shipping (and all other shipping sectors for that matter) have sadly become real, and have put shipping back into the limelight,' the article said.
'The first risk emanates from geopolitical factors, exemplified by carriers deciding to avoid the Red Sea and the Suez Canal following a series of attacks on ships by Yemen's Houthis in support of Hamas in the war with Israel.
'Simultaneously, the second risk arises from the spectre of climate change, here exemplified by the Panama Canal reducing its capacity in a bid to preserve levels in the canal's watershed.
'The realisation of these twin risks has created a metaphorical pincer move that threatens to overturn all of Drewry's previous predictions about the container market's direction and balance of power.
'It is important to state that neither canal is formally closed, but faced with a very real physical danger to crew and assets (Suez), and capacity restrictions and potential operational delays (Panama), carriers must quickly decide if the risk is worth it, and if not, plot a new course asap.
'There was some flip-flopping, but as of today the vast majority of container services have stuck with the original decision to take the long way around the Cape of Good Hope,' Drewry said.
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