The risk of spillover from the Arab-Israeli conflict has spread to international shipping. Analysis predicts that the risk of supply chain disruptions has further intensified, and the Suez Canal, the “main artery” of shipping, is also at risk of being shut down.
The attack on the Red Sea freighter shocked the global trade market.
International crude oil rebounded sharply on Monday. Brent crude oil once rose nearly 4%. Currently, it has been rising for 5 consecutive trading days.
Global shipping stocks rose strongly. Global shipping giant Maersk once rose nearly 5% on Monday, with a cumulative increase of 16% over five trading days. Italian tanker D'Amico, German shipping company Hapag-Lloyd (Hapag-Lloyd), and Norwegian tanker Hafnia rose 4% -7% on Monday, continuing the sharp rise of last week. The A-share Air China Ocean hit a 30cm rise and stop on Monday, while stocks such as Jin Jiang Shipping and COSCO Hyneng rose and stopped.
This means that after the Houthis in Yemen frequently attacked cargo ships in the Red Sea in recent days, the risk of spillover from the Arab-Israeli conflict has intensified and affected international shipping. The analysis predicts that there may be more trade disruptions in the future. 20% of global capacity will be consumed due to transportation delays, 30% of Israel's imports will be affected, and there is also a risk that the Suez Canal, the “main artery” of shipping, will be shut down.
20% of global capacity and 30% of Israel's imports have been impacted, further increasing the risk of supply chain disruptions
Since a new round of clashes broke out between Israel and Hamas in early October, more than a dozen cargo ships passing through the Red Sea have been attacked, and several major shipping companies and oil carriers have suspended services through the Red Sea.
Mediterranean Shipping (MSC), Maersk, Hapag-Lloyd, Dafei Shipping (CMA-CGM), Yangming Shipping, and Changrong Shipping all announced changes to all scheduled Red Sea itineraries to ensure the safety of seafarers and ships. Overall, these shipping companies account for around 60% of global trade. In addition, BP and European oil and gas giant Norway's Equinor also announced on Monday that all transportation through the Red Sea will be suspended.
Changrong Shipping also stated that it will temporarily stop accepting goods sent to Israel and will suspend transportation services to Israel.
“About 30 per cent of Israel's imports are shipped via container ships through the Red Sea. These vessels need to be booked 2-3 months in advance for the delivery of consumer goods or other products. This means that if the voyage is extended now, then products imported from the Far East with a shelf life of 2-3 months are not worth importing.” Yoni Essakov, a member of the Executive Committee of the Israel Chamber of Shipping, said.
Essakov added: “Due to uncertainty, importers will need to increase inventory and pay more, while others will lose markets due to uncompetitive time to market.”
According to an earlier Wall Street News article, Peter Sand, chief analyst at maritime consulting firm Xeneta, said about the impact of the conflict on trade and shipping: “It is unlikely that the Suez Canal (connecting the Mediterranean Sea to the Red Sea) will close, but this risk still exists. Global shipping is expected to experience some kind of overreaction in the short term, and trade transportation costs through the Suez Canal may jump.”
“About 19,000 ships pass through the Suez Canal every year,” said Michael Aldwell, executive vice president of shipping logistics at Kuehne+Nagel (Kuehne+Nagel), the world's largest sea freight forwarder. “It is anticipated that delays in water transportation will consume 20% of the global fleet capacity, thereby impacting the availability of shipping resources.”
He added that there will also be delays in transporting empty containers back to Asia, which will only exacerbate supply chain difficulties.
Moody's highlighted the delays in a report to customers.
Daniel Harlid, senior credit officer at Moody's, wrote: “This situation, if it continues for more than a few days, will have a positive credit impact on the container shipping industry and the tanker and dry bulk markets.” “But it also increases the risk of further supply chain disruptions.”
Editor/Somer