Tesco
Suez Canal at risk: What shippers should know to mitigate disruption
Article

Suez Canal at risk: What shippers should know to mitigate disruption

Using alternative routes like the Cape of Good Hope not only means longer transit times but higher freight costs. Here’s what shipping experts had to say.

Alejandra Salgado
Supply Chain Dive, 2023
Read the article

Read or listen offline

  • 0.5×
  • 0.75×
  • 1×
  • 1.25×
  • 1.5×
  • 1.75×
1×

Editorial Rating

8

Qualities

  • Comprehensive
  • Eye Opening
  • Engaging

Recommendation

With the advent of Houthi attacks on ships traversing shipping lanes in the Red Sea to the Suez Canal, some major carriers rerouted their cargo ships by way of South Africa’s Cape of Good Hope. Carriers that take this alternate route suffer additional costs and transit times. The trip from Asia to Europe around the Cape is 3,500 kilometers (2,175 miles) longer than the journey through the Suez Canal and costs an additional $500,000 to $1 million in fuel, as well as other expenses, such as insurance. As a result, delivery will be slower, shippers must hold inventory longer and shipping rates will inevitably increase.

Take-Aways

  • Cargo shippers are diverting their vessels from the Red Sea and the Suez Canal due to attacks by Houthis.
  • Taking alternate routes by way of South Africa’s Cape of Good Hope incurs significant additional time and costs.
  • Shippers moving goods from Asia to Europe need to look carefully at their insurance policies.

About the Author

Alejandra Salgado is a staff reporter for Supply Chain Dive. Before joining Industry Dive, she interned at CNBC, Bloomberg and Long Beach Local News.

Comment on this summary or Diskussion beginnen