8/1/2024

West warns Red Sea rebels amid growing fears of wider conflict.

 

Australia joined the US and 10 other countries to condemn the ‘‘illegal, unacceptable, and profoundly destabilising’’ attacks that have disrupted global trade

Oil prices rose 3 per cent in response to the Middle East turmoil and global shipping costs continued to soar. Australian grape growers fear further delays to exports already caught up by industrial action at ports, and livestock exporters are closely monitoring the situation because the Red Sea services important Middle East markets.

Shipping data shows that container ships travelling to and from Asia to Europe and North America are avoiding the shorter route through the Red Sea and Suez Canal, instead sailing around Africa to avoid the rebels’ drone and missile attacks and hijack attempts.

Asia-to-north Europe shipping rates more than doubled to above $US4000 ($5950) per 40-foot container this week, and Asia-to-Mediterranean prices climbed to $US5175, according to Freights’, a booking and payments platform for international freight.

Some carriers had announced rates above $US6000 per 40-foot container for Mediterranean shipments starting mid-month, and surcharges of $US500 to as much as $US2700 per container could make all-in prices even higher, Freightos’ head of research, Judah Levine, said.

Many container shipping lines have elected to avoid the Red Sea route, following a wave of attacks, instead sailing their fleets thousands of kilometers around Africa.

The channel usually handles about 12 per cent of the world’s commerce. The attacks have added to the risks of a regional expansion of Israel’s war with Hamas in Gaza and driven up cargo rates around the world.

Egypt’s Suez Canal connects the Red Sea to the Mediterranean Sea and is the fastest way to ship fuel, food and consumer goods from Asia and the Middle East to Europe. Shippers use the route to ferry about one-third of all global container cargo.

The attacks are delaying the delivery of products destined for many companies because the Suez route is used by the likes of IKEA, Walmart and Amazon.

As of Wednesday, more than 180 container ships and other vessels had been rerouted around Africa’s southern Cape of Good Hope to avoid the attacks – adding anywhere from seven to 20 days to their voyages, according to supply chain management technology company Project44.

Ports Australia chief executive Mike Gallacher said the Red Sea conflict would add to delivery delays and higher shipping costs for Australian consumers, but there had been little direct impact on this country’s port operators.

He said the biggest source of disruption was goods shipped to Singapore via the Red Sea, which were then transferred to smaller cargo vessels and sent to Australia.

‘‘Most of our bulk materials go to Asia and container ports are not seeing any effect. Vessels are still on time,’’ Mr. Gallacher said. ‘‘There are no alarm bells currently.’’

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