Red Sea Crisis, Impact On TEU Miles

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The reworking of liner networks to circumvent the Red Sea crisis by utilizing the round-of-Africa routing has had a notable impact on global TEU Miles. By comparing the demand for transporting the same cargo volume globally in 2024 under normal circumstances versus the diversion around the Cape of Good Hope (COGH), a significant increase in TEU Miles has been observed, says an article published on sea intelligence website.

Summary

  • The reworking of liner networks to circumvent the Red Sea crisis by utilizing the round-of-Africa routing has significantly increased global TEU Miles.
  • In 2024, with the diversion around the Cape of Good Hope (COGH), the demand for transporting the same cargo volume globally is estimated to reach 994 billion TEU*Miles, a substantial increase of 16% compared to the previous year.
  • The impact of the Red Sea crisis varies across different trade routes. The Europe-Indian Subcontinent trade route experiences the most significant impact, while the trade between the Far East and North America is relatively less affected.
  • With the 16% increase in global TEUMiles, there is a corresponding need for increased capacity. Carriers can address this demand through two primary mechanisms: absorbing existing overcapacity and speeding up vessel operations to transport more TEUMiles per year.

Quantifying The Impact

In 2023, global TEU Miles stood at 860 billion. However, in 2024, with the diversion around COGH, the demand for transporting the same cargo volume globally is estimated to reach 994 billion TEU*Miles. This represents a substantial increase of 16% compared to the previous year.

Regional Variances

The impact of the Red Sea crisis varies across different trade routes. The Europe-Indian Subcontinent trade route experiences the most significant impact, while the trade between the Far East and North America is relatively less affected. This discrepancy is due to volume-weighted calculations and the unaffected distances from the Far East to the US West Coast and US East Coast via Panama.

Implications For Capacity

With the 16% increase in global TEU Miles, there is a corresponding need for increased capacity. Carriers can address this demand through two primary mechanisms: absorbing existing overcapacity and speeding up vessel operations to transport more TEU Miles per year. Currently, both mechanisms are in effect, with additional capacity injections likely leading to adjustments in vessel speeds throughout 2024.

Conclusion

The Red Sea crisis has significantly impacted global TEU Miles, necessitating adjustments in shipping routes and operations. As carriers navigate the increased demand for capacity, strategic measures will be essential to optimize efficiency and maintain service levels amidst ongoing developments in the maritime industry.

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Source: sea intelligence