First-half earnings in Asia showed how the ripple effects of the Red Sea crisis will continue to be costly for companies that make goods for export, while those that transport their wares benefit from higher freight rates, reports ajot.
Vessel traffic reduced
Containerships avoiding the risk of being attacked in the Red Sea reduced vessel traffic in the narrow passageway by about 70% as of mid-July from December, according to Bloomberg Intelligence. That increased transit times and freight rates.
Chinese shippers including Cosco Shipping Holdings Co. saw earnings lifted by higher revenue from its container shipping business, while Orient Overseas International Ltd. said its transpacific trade route performed better as tight supply chain contributed to higher freight rates.
The Iran-backed Houthis, who control parts of northwestern Yemen, have been attacking ships with drones and missiles since mid-November. The Islamist militants say they are targeting Israeli- and Western-linked vessels in solidarity with Palestinians as the war in Gaza continues.
The effects were mixed for port operators. China Merchants Port Holdings Co. said its port in Sri Lanka benefited from the increase in transshipment cargoes due to the Red Sea situation, whereas container volumes at its Turkey port were lower.
Cathay Pacific Airways Ltd. also said it carried about 10% more cargo volume between January and June. The airline, along with HSBC analysts, expects demand will remain at healthy levels until the end of the year.
MSC Mediterranean Shipping Co.’s Chief Executive Officer Soren Toft sees no end to the Red Sea crisis anytime soon.
Did you Subscribe to our daily newsletter?
It’s Free Click here to Subscribe!
Source: Ajot
