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

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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.

Supply Chain Dive,

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¿De qué se trata?

As Houthi attacks added new risks to shipping through the Red Sea to the Suez Canal, freight costs surged.

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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.

Summary

Cargo shippers are diverting their vessels from the Red Sea and the Suez Canal due to attacks by Houthis.

Cargo ships going from Asia to Europe typically use the transport route from the Red Sea through the Suez Canal and then to the Mediterranean. The Suez Canal averaged 68 ships daily in 2022 when 23,851 vessels passed through.

However, Houthi militants in Yemen started launching attacks against cargo ships in the Red Sea in 2023, increasing the risk of going through the Suez Canal. As a result, some major carriers (MSC, Maersk, and others) stopped using the Canal and began rerouting their European-bound ships by way of South Africa’s Cape of Good Hope.

Now, a coalition called Operation Prosperity Guardian is bringing together multiple countries – including the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain – to address security challenges in the southern Red Sea and the Gulf of Aden jointly.

The coalition’s goal is to ensure freedom...

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.

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