Shipping Industry Under Strain As Houthis Menace Trade Lane

• A major highlighted concern over container shipping, due to Houthi attacks in the Red Sea.
• Shares of leading shipping companies initially dropped.
• The increased demand before the holiday is causing concerns about capacity

Capacity Constraints Due To Red Sea Attacks

A major industry consultant highlighted concerns over container shipping facing a crunch ahead of the Lunar New Year due to Houthi attacks in the Red Sea, limiting capacity and impacting global trade routes, reports TT News.

Stocks React to Reports of Deals with Houthi Militants

Shares of leading shipping companies initially dropped, later recovering, following reports suggesting some firms had negotiated agreements with Yemen’s Houthi rebels to secure safe passage through the Red Sea. Despite denials from major players like A.P. Moller-Maersk A/S and Hapag-Lloyd AG, speculations around faster sailing routes between Asia and Europe surged.

Impact on Shipping Stocks and Routes

Companies like A.P. Moller-Maersk A/S and Hapag-Lloyd AG experienced significant stock declines due to the disruptions, affecting their operations. The diversion of ships, sailing thousands of miles more than usual, is limiting vessel availability, impacting trade volumes, and affecting transit through the Suez Canal.

Foreseen Trade Difficulties

With the Lunar New Year approaching on Feb. 10, the upcoming weeks are expected to be arduous for trade volumes, especially in China. The increased demand before the holiday is causing concerns about capacity availability and potential congestion at ports.

Wider Impact on Global Trade

The attacks by Houthi militants in Yemen have affected not only container shipping but also other sectors like fuel transportation. Attacks and diversions have led to disruptions in global sea traffic, impacting trade routes and costs.

Estimates and Future Projections

Drewry Shipping estimates that around 822 ships, carrying about 10 million containers, have been impacted by the attacks and subsequent diversions. This extensive impact is causing ripple effects across various sectors involved in global trade.

Potential Respite Post Lunar New Year

While the next few weeks pose challenges, it’s speculated that costs might ease after the Lunar New Year period, offering some relief to the strained shipping industry. However, the immediate future remains uncertain given the ongoing disruptions caused by the attacks.

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Source: TT News

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