Red Sea Attacks Pose a Triple Threat to Global Trade

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  • Recent Houthi attacks in the Red Sea, combined with disruptions in the Black Sea and Panama Canal, have reshaped maritime trade flows, stressing the industry’s resilience.
  • These events have prompted shifts in trade routes, impacting global inflation and energy prices, while also raising concerns about environmental implications and safety protocols.

Houthi attacks on vessels in the Gulf of Aden and Red Sea have disrupted maritime trade routes, adding tensions and costs to global trade. These attacks, compounded by disruptions in the Black Sea and Panama Canal, have altered trade patterns and stressed the industry’s resilience.

Trade Disruptions and Inflation Concerns

The attacks have led to a significant decline in trade through the Suez Canal, prompting rerouting of ships around the Cape of Good Hope. Concerns about inflation have emerged, with surges in agriculture and export prices observed, particularly in energy markets due to the transit of oil and liquefied natural gas through the Suez Canal.

Resilience of Container Shipping

Despite disruptions, container shipping remains relatively insulated, with a recovery in transit numbers observed. While larger container ships are carrying fewer containers due to draught restrictions in the Panama Canal locks, container cargo is expected to increase, aided by an increase in daily transits by the Panama Canal Authority.

Environmental and Safety Considerations

Rerouting vessels around the Cape of Good Hope poses environmental challenges, raising questions about fuel consumption and emissions. The EU Emissions Trading System’s flexibility in accounting for route variations enforced by geopolitical events is under scrutiny, alongside considerations for crew and ship safety amidst changing trade routes.

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Source: Ice Shipping