Military conflicts in the Red Sea have caused a shake-up in global trade, which could lead to disruptions and increases in commodity and fuel prices.
Several major shipping lines and oil transport companies have suspended services through the Red Sea after more than a dozen ships have been attacked since the conflict between Israel and Hamas began in early October. Companies such as MSC, Maersk, Hapag Lloyd, CMA CGM, Yang Ming Marine Transport, and Evergreen have announced that they will immediately divert all scheduled itineraries to ensure the safety of their crew and vessels. These ocean carriers account for about 60% of global trade.
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Evergreen said it would temporarily stop accepting goods from Israel and suspend shipping services to Israel. Due to operational issues, China’s Orient Overseas Container Line (OOCL) has also stopped receiving goods from Israel.
On Monday (December 18), oil giant BP announced that it would also suspend shipping operations in the Red Sea during the regional conflicts. Frontline tanker group has also avoided passing through the Red Sea.
The conflict has increased the cost of shipping by sea. According to Freightos, since the Israel-Hamas conflict occurred, shipping rates from Asia to the US East Coast have increased by 5% to 2,497 USD/40-foot container.
