Italian Ports Facing Severe Disruption

Houthi attacks on Red Sea shipping are causing major disruption to Italian ports, operators say, fuelling fears that a prolonged crisis may force companies to redraw routes and move traffic away from the Mediterranean more permanently, says an article published on reuters website.

Summary

• Houthi attacks in the Red Sea are causing significant disruptions to Italian ports, potentially affecting up to 15% of global shipping traffic.
• Italy relies heavily on the Suez Canal route for its international maritime trade, with approximately 40% of its trade, totaling around 154 billion euros ($168 billion) in 2022, depending on this route.
• Some shipping companies are diverting vessels to a slower and more expensive route around southern Africa in response to the Houthi attacks.
• There are fears of a potential shift of customers back to Northern European ports and concerns about the broader impact on trade due to delays in container ship arrivals from Asia to Trieste.
• Exporters are contemplating rail transportation to Asia as an alternative, despite the higher cost but shorter time. The situation is described as a “perfect storm” by industry leaders.

Houthi Attacks Disrupt Shipping

Houthi attacks in the Red Sea are causing significant disruptions to Italian ports, sparking concerns of potential long-term impacts on shipping routes and Mediterranean traffic. The Houthi group, aligned with Iran, has targeted vessels since November, affecting a route responsible for up to 15% of global shipping traffic. The attacks are purportedly in solidarity with Palestinians during the conflict between Israel and Hamas in Gaza.

Italy’s Reliance On Suez Canal Route

Italy, strategically located in the Mediterranean, has capitalized on its position to capture sea traffic from the Suez Canal destined for European markets. Approximately 40% of Italy’s international maritime trade, totaling around 154 billion euros ($168 billion) in 2022, relies on this route.

Shift To Southern Africa Route

In response to Houthi attacks, some shipping companies are diverting vessels to a slower and more expensive route around southern Africa. Sailing around the Cape of Good Hope, adding 10 to 15 days to the journey, may offer a more convenient path directly to Northern Europe, bypassing the central Mediterranean.

Concerns And Potential Impact On Trade

Operators fear a potential shift of customers, particularly from Germany, Austria, and Hungary, back to Northern European ports. Delays in container ship arrivals from Asia to Trieste have been reported, leading to concerns about the broader impact on trade.

Consideration Of Rail Transportation And Economic Impact

Exporters, especially of high-value goods, are contemplating rail transportation to Asia as an alternative, despite the higher cost but shorter time. The situation is described as a “perfect storm” by industry leaders, with the crisis coinciding with the Mediterranean’s increasing centrality to global trade.

Potential Consequences And Adjustments

The duration of the crisis will likely influence cost increases for companies and drive up shipping prices. Imports from Asia, crucial to many Italian businesses, face potential disruptions, as seen in Genoa, where container ships’ non-arrival has raised concerns about port congestion.

Impact On Supply Chains And Near-Shoring Trend

The escalation in the Middle East may necessitate a reevaluation of supply cycles, potentially leading to increased procurement challenges in late February and early March. Sectors such as computers, automotive, and semiconductors could be particularly vulnerable if the crisis persists. The turbulence in the Red Sea has accelerated a trend toward “near-shoring,” with businesses considering sourcing goods closer to home, even at higher prices, reflecting the ongoing regionalization of value chains.

Did you subscribe to our daily Newsletter?

It’s Free! Click here to Subscribe

Source: Reuters 

• 
• 
• 
• 
• 
• 
• 
•