- MOL’s scheduled ship entry already limited to ‘a few vessels.’
- NYK mulls ‘halting or changing routes’ for ships transiting Red Sea.
- Impact of Gulf of Aden conflict felt in Persian Gulf.
Japan’s Mitsui O.S.K. Lines, among the world’s largest ship operators, has halted ship entry into the Red Sea from the Suez Canal and the Gulf of Aden as part of its response to ensure the safety of its vessels amid escalating security threats, a company spokesperson told S&P Global Commodity Insights Jan. 15.
“We have temporarily suspended all of ships scheduled to enter the Red Sea, or the Gulf of Aden to date as part of our given priority to safety,” said the spokesperson, adding that the step will be in place until confirming improvement in the situation.
As of May 2023, MOL had the world’s third largest shipping fleet after China’s Cosco and Japan’s NYK Line, with its largest LNG fleet, second largest car carriers, fourth largest dry bulkers and fifth largest tankers, according to MOL.
Halt of ship entry into the Red Sea
MOL’s scheduled entry of its ships, however, has already been limited to “a few vessels,” said the spokesperson, adding that a part of the subjected ships could also take other routes, declining to elaborate.
MOL joins a growing number of major shipping companies that have suspended their transit of the Red Sea, a key waterway, amid deteriorating security situation off Yemen following US-led strikes on Houthi rebels in Yemen on Jan. 11 evening.
NYK is also considering “halting or changing routes” for its operated ships near the Red Sea as “the Red Sea navigation risk has significantly increased following the [recent] air strike,” a NYK spokesperson told S&P Global.
NYK had previously initiated discussions with its ship and cargo owners to bypass the Red Sea following the Nov. 19 seizure of its chartered car carrier Galaxy Leader near Hodeidah, Yemen.
The temporary halt of MOL’s ship entry into the Red Sea and NYK’s consideration of halting or changing shipping routes are significant, as the two among the world’s largest shipping companies have a fleet with various shipping routes, compared with container shipping companies running on fixed routes.
Ocean Network Express (ONE), the joint container shipping arm of MOL, NYK and Kawasaki Kisen Kaisha (K Line), decided as of Dec. 19 to navigate away from the Suez Canal and the Red Sea in the wake of escalating security threats, rerouting its ships via the Cape of Good Hope instead or temporarily pausing voyages, the company said late Dec. 19.
Greater impact
As a direct impact of the conflict in the Gulf of Aden, shipping market participants said the Persian Gulf is also experiencing an impact.
Some charterers forecast a two-tier market where westbound voyages such as from the Persian Gulf to Europe, involving Red Sea transits, may become more expensive, while those to North Asia may face downward pressure.
“There may be such pressure as owners will prefer to keep their ships East of Suez,” said a chartering executive with a global commodity trading company.
There will be more ships for eastbound voyages and fewer for westbound voyages because when they deliver cargoes in Europe and America, it takes longer to return for the next loading, the executive said.
Among refined products, naphtha is the single most important commodity by volume that moves on the Middle East-Far East routes, with Japan and South Korea being the biggest importers. Gasoil and jet fuel move from the Middle East to Europe.
Not all owners agree with this premise, though. Overall, charterers are keen to grab tankers at the earliest, preempting a rise in freight and owners are in no hurry to offer them, said a source with one of the Long Range tanker owners.
Several LR 2 cargoes have been quoted since Friday as charterers want to cover their requirements before the conflict in Red Sea pushes up freight, said a broker in Copenhagen. He was referring to naphtha cargoes of 75,000 mt each that move on the Persian Gulf-Far East routes. However, with the risks involved, owners are reluctant to make offers, he said.
Freight rates on most routes were unchanged Jan. 15 as market participants adopted a “wait and watch approach.”
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Source: Platts
