Shipping Traffic through Suez Canal Drops 45% Since Red Sea Attacks, Reports UNCTAD

The United Nations Conference on Trade and Development (UNCTAD) stated that shipping traffic through the Suez Canal has decreased by 45 percent in the past two months due to shipping companies diverting vessels away from the Red Sea after attacks by the Houthi rebels.

This has further disrupted already troubled maritime trade routes. UNCTAD warned of the risks of rising inflation, food security uncertainties, and increased emissions of greenhouse gases.

Shipping companies have redirected ships away from the Red Sea since the Houthi movement, allied with Iran and controlling large areas in Yemen, began launching attacks on ships in solidarity with Palestinians in Gaza.

The United States and Britain responded by launching airstrikes against the Houthi rebels.

UNCTAD reported that the number of ships crossing the Suez Canal decreased by 39 percent compared to the start of December, resulting in a 45 percent drop in cargo loads.

Jean Hoffman, Head of Commercial Logistics Services at UNCTAD, expressed concern about the delays, cost increases, and increased emissions of greenhouse gases.

He added that emissions are increasing because ships are choosing longer routes and traveling faster to compensate for the route diversion.

Between 12 and 15 percent of global trade and between 25 and 30 percent of container movement rely on the Suez Canal. Container shipments through the canal decreased by 82 percent in the week ending January 19 compared to early December.

Liquefied natural gas shipments declined the most, while dry bulk commodity shipments decreased to a lesser extent, and crude oil tanker movement slightly increased.

Spot container rates experienced their largest weekly increase by $500, impacting shipments not only from Asia to Europe but also to the western coast of the United States without passing through the Suez Canal, which increased more than twofold.

However, the rates have only reached about half the peak during the COVID-19 pandemic.

Hoffman stated that the impact may lead to price increases in food commodities, with nearly half of the recent price increases since the Ukraine conflict attributed to higher transportation costs.

However, the effects on end consumers in advanced countries may take some time to materialize. Passing on these high shipping costs to consumers may take up to a year until they are seen in stores such as IKEA, Walmart, and others. (Reuters)