Impact of Red Sea Crisis on Asia-Europe Shipping Routes

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  • The Red Sea crisis has shifted Asia-Europe shipping routes, increasing reliance on the Cape of Good Hope.
  • This detour has increased transit times and fleet size, impacting global container supply.
  • The global container fleet continues to expand due to high new building orders post-Covid-19.

The ongoing Red Sea crisis has forced liner operators to divert Asia-Europe services around the Cape of Good Hope, avoiding Houthi-controlled areas. Analyst Jan Tiedemann from Alphaliner noted at a maritime conference that this route shift is likely to continue until 2026, reports Loadstar.

Cape of Good Hope’s Strategic Advantage

Tiedemann stated, “I think shipping companies will stick to the route as long as possible. The Cape of Good Hope benefits shipping companies, as it averts the current oversupply.”

He advised operators to continue avoiding the Suez Canal for now, as the Cape route reduces vessel congestion.

Extended Transit Times and Fleet Deployment

Detouring around the Cape has extended the operating period of Asia-Europe routes from 12 weeks to 14 weeks. As a result, the number of vessels deployed on these routes has increased to manage the longer travel times.

Alphaliner’s analysis shows a 16% rise in container fleet on the Asia-Europe route due to these changes. In contrast, global shipping capacity has seen a decrease of 4%-5% overall, demonstrating a concentrated fleet increase on this particular trade route.

Maintaining Fleet Size for Oversupply Control

According to Tiedemann, “Shipping lines won’t reduce their fleets operating on the Asia-Europe route to fewer than 13 ships, even if Suez transits resume.” He predicts that adding an extra vessel per route will help manage the oversupply challenges caused by fleet redirection.

Following record newbuilding orders during the COVID-19 pandemic, the global container fleet reached an all-time high of 7,073 ships, totaling 30.65 million TEU in September. This is a 10% increase from the previous year.

Newbuilding Orders Add to Global Supply

Currently, orders for new buildings represent about 25% of the active fleet (7.47 million TEU), marking a significant increase in global shipping capacity.

This increase could further amplify the oversupply situation, especially on routes like Asia-Europe, where fleet deployment is already high due to the Red Sea crisis.

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Source: Loadstar