Summary:
- The M/V Tutor was sunk by Houthi attacks, marking the second vessel the Houthi group has sunk.
- Volume through the canal is at record lows. As Ocean is gearing up for peak season, May of 2024 saw an 80% reduction compared to May 2023.
- Shippers should budget extra transit time for peak season freight this year when utilizing typical Suez Canal lanes. To ensure freight arrives in time for retail peak season, transit time around Africa should be the assumption for planning purposes
Yemen Group Houthi Continues to Target Commercial Vessels
The Houthi rebel group continues to have a significant impact on supply chains with numerous attacks in recent weeks. The M/V Verbena was struck resulting in one crew member being medically evacuated to a nearby military vessel. More recently, the M/V Tutor sunk following two attacks, marking the second vessel the Houthi group has successfully sunk. One member of the Tutor crew is reported as missing and has been reported by some media outlets as killed, while the rest of the 22-member crew was able to be evacuated to safety.
Despite military defense from numerous countries including the United States, the Houthi group remain undeterred and have been continuing with the attacks against commercial vessels in the Red Sea with no clear resolution in sight.
Volume through the Suez Canal
Since the attacks began in December, hundreds of vessels across all major carriers have rerouted to avoid the Red Sea. This has caused the lowest volume levels in recent history through the Suez Canal. Based on May numbers, where there is generally an uptick in sailings due to peak season starting, shippers are not resuming this route for the incoming holiday volumes. May 2024 saw nearly an 80% reduction in passages when compared to May 2023. These numbers are expected to stay low, and carriers are anticipated to continue rerouting around Africa or through the Panama Canal until tensions in the Red Sea are resolved.
Impacts to Transit Times
As vessels reroute to avoid the Red Sea, transit time increases by anywhere from a median of 7-10 days on lanes that leverage the canal. The charts below shows the median transit time on major routes weekly through June 20th.
China to Europe, Southeast Asia to Europe, and Southeast Asia to the US East Coast have all increased a median amount of 10-14 days. These transit times represent the new normal as carriers continue to avoid the Red Sea. The chart below shows the median transit times from Asia to some of the major ports in Europe and the east coast of the US.
Impacts of the attacks are apparent throughout the US and Europe, with an overall increase in transit days of nearly 2 weeks.
The vessel schedule reliability chart below tracks how late containers in transit are expected to be based on updates in schedules.
The chart above does show that carriers have generally adjusted schedules to the new routes. While there is more variance post-attacks, this has levelled out to 4-8 days, compared to highs of 2 weeks closer to when the first attacks began in December.
Historical Trade Through the Suez Canal
The Suez Canal was opened in 1869 to connect the North Atlantic Ocean to the Indian Ocean through the Mediterranean and Red Seas. Since then, it has become an integral trade route for global supply chains and saves 7-20 days of travel that would be needed for vessels to go all the way around Africa. Interruptions to the flow of vessels can have major impacts to trade as demonstrated in 2021 when a stuck vessel halted operations for six days.
As ocean carriers announce plans to reroute vessels around the canals, trade lanes that leverage the Suez Canal should be prepared for major delays.
Concern for Safety of Front-Line Seafarers
While project44 has made it a priority to provide frequent updates on the Red Sea crisis, the safety of the crew members on these ships remains top priority in these challenging times. They and their families are in our thoughts.
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Disclaimer: The information conveyed herein, shared solely for summary and not contractual purposes, comes from both project44 and third-party reporting. The project44 data does not include all available market information, and project44 has not undertaken to independently verify the third-party reporting. Similarly, this type of data changes from day-to-day. Accordingly, the reader should not rely on this reporting to make any business decisions, and project44 expressly disavows any liability arising from any such reliance.
