Red Sea crisis: Markets spike and consumers to pay the price

Latest data from shipping analysis firm Xeneta shows spot rates in the ocean freight shipping market spiked by 20% since Friday (15 December) after major shipping liner companies decided to halt sailings through the Red Sea amid the attacks by Houthi militia.

Peter Sand, Xeneta chief analyst, commented, “The region is essentially in a war situation because it is too dangerous for many vessels to sail through the Red Sea and therefore also the Suez Canal, which is the major artery for world trade.

“Ships are now being re-routed via the Cape of Good Hope, but not only will this add up to 10 days sailing time, it will cost up to US$1 million extra in fuel for every round trip between the Far East and North Europe.

“There is capacity in the market, but it will come at a cost, and we could see ocean freight shipping rates increase by 100%. This is a cost that will ultimately be passed on to consumers who are buying the goods.”