Suez Canal is blocked

Suez Canal is blocked

increase shanghai container freight index

Suez Canal is blocked because of attacks by Yemen’s Houthi militants.

 

 The recent attacks by Yemen’s Houthi militants on ships in the Red Sea, particularly those transiting to or from the Suez Canal, have significantly disrupted maritime trade. These attacks have caused concern over potential supply bottlenecks, which could lead to a reignition of inflation. The Houthis, aligned with Iran, have been targeting ships since November, slowing trade between Asia and Europe. This escalation has coincided with the war between Israel and Palestinian Hamas militants in Gaza.

 

 One notable incident involved the Genco Picardy, a U.S.-operated vessel, which came under attack in the Gulf of Aden, leading to a fire onboard. The crew was rescued by the Indian Navy, and the Houthis claimed responsibility, stating their actions were in solidarity with Palestinians. They have also threatened to target U.S. ships in response to American and British strikes on their positions.

 

 The U.S. has responded with limited military strikes and sanctions in a strategy to prevent a wider Middle East conflict while punishing the Houthis. However, these measures have not yet halted the militant attacks.

 

 The impact of these attacks extends beyond immediate security concerns. The disruption has led to a significant decrease in revenue for Egypt from the Suez Canal, which is crucial for its economy. In the first 11 days of January, revenue reportedly fell by 40%. Additionally, wheat shipments through the canal declined by almost 40% in the first half of January.

Container transport charge is increasing.

 

 This situation has also led to a change in global shipping logistics. Many vessels are now rerouting via the longer East-West route around South Africa’s Cape of Good Hope, adding 10-14 days to their journeys. This rerouting is altering refueling patterns and increasing demand for bunker fuel at ports far from the usual shipping lanes. Major shipping lines, including Denmark’s Maersk, have instructed hundreds of commercial vessels to avoid the Red Sea, which is causing congestion at several container terminals and concerns about being bypassed in ports in Italy and France.

 

 These developments highlight the fragility and interconnectedness of global trade and the significant impact regional conflicts can have on international commerce and logistics. so SCFI(Shanghai Container Freight Index) is increased such like above picture.

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