How will global trade be impacted by Red Sea avoidance? | The Business Standard
Skip to main content
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
The Business Standard

Friday
June 13, 2025

Sign In
Subscribe
  • Latest
  • Economy
    • Banking
    • Stocks
    • Industry
    • Analysis
    • Bazaar
    • RMG
    • Corporates
    • Aviation
  • Videos
    • TBS Today
    • TBS Stories
    • TBS World
    • News of the day
    • TBS Programs
    • Podcast
    • Editor's Pick
  • World+Biz
  • Features
    • Panorama
    • The Big Picture
    • Pursuit
    • Habitat
    • Thoughts
    • Splash
    • Mode
    • Tech
    • Explorer
    • Brands
    • In Focus
    • Book Review
    • Earth
    • Food
    • Luxury
    • Wheels
  • More
    • Sports
    • TBS Graduates
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • Gallery
    • Long Read
    • Interviews
    • Offbeat
    • Magazine
    • Climate Change
    • Health
    • Cartoons
  • বাংলা
FRIDAY, JUNE 13, 2025
How will global trade be impacted by Red Sea avoidance?

Global Economy

DW
20 December, 2023, 09:20 am
Last modified: 20 December, 2023, 09:25 am

Related News

  • National Action Plan to boost shipping sector competitiveness: Sakhawat
  • Six Russians dead, 39 tourists rescued after submarine sinks in Red Sea off Egypt
  • BSC plans to re-enter container shipping after over a decade
  • Record container, cargo handling: Ctg port, shipping ministry employees to get Tk60,000 incentive bonus each
  • Bangladesh's garment sector reforms driven by global supply chain pressure: Debapriya

How will global trade be impacted by Red Sea avoidance?

After a rise in attacks by the Houthis, the world's largest shipping firms are staying away from the Red Sea and Suez Canal

DW
20 December, 2023, 09:20 am
Last modified: 20 December, 2023, 09:25 am
File Photo: A ship is docked at the Red Sea port of Hodeidah, Yemen, March 23, 2017. -REUTERS
File Photo: A ship is docked at the Red Sea port of Hodeidah, Yemen, March 23, 2017. -REUTERS

Over the past week, most of the world's largest shipping firms have said they will avoid the Red Sea and therefore the Suez Canal after Yemen-based Houthi rebels fired missiles at cargo ships over the Israel-Hamas war.

Instead, ships traveling from the Far East to Europe will need to make a detour around the entire African continent, via South Africa's Cape of Good Hope. The journey will take more than a week longer and will add about 3,500 nautical miles (6,482 kilometers) to the journey. 

The Suez Canal, which connects the Red Sea to the Mediterranean, is the shortest route between Europe and Asia. About 12% of global shipping traffic normally transits the waterway.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

Costs for shipping firms skyrocket

The decision is already having a huge impact on the cost of shipping goods, say industry analysts. If it becomes an extended crisis, it could spark a hike in the price consumers pay for imported goods.

"Take one round-trip voyage from Shanghai to Rotterdam and you add a million dollars in terms of fuel costs from rerouting via the Cape of Good Hope," Peter Sand, chief analyst at the Copenhagen-based market analytics firm Xeneta, told DW. "So that alone is a huge bill."

Insurance premiums have soared in response to the attacks, while container shipping lines that run weekly services between Asia and Europe will need to factor in the cost of three extra ships to ensure a similar level of service, Sand added.

The delays in shipping will then have knock-on effects at container ports across Europe, which are usually extremely efficient at handling flows of large numbers of containers.

"Let's say I have a port that handles 50,000 containers per week. But then if nothing arrives for a week, and the following week a hundred thousand containers arrive, that can cause congestion problems," Lars Jenson, CEO of Vespucci Maritime, a Denmark-based shipping industry consultancy, told DW.

The Red Sea crisis has stirred memories of March 2021 when the Suez Canal was blocked for six days after the container ship Ever Given ran aground. At that moment, the world was exiting lockdowns from the COVID-19 pandemic and huge bottlenecks had already emerged in global trade supply chains.

Hundreds of ships were left in a holding pattern in the Red Sea for weeks and the cost of shipping a container rose from $2,000 (€1,828) to $14,000. The Ever Given crisis caused months of additional delays to goods imported from Asia.

Supply chains more robust today

Although supply chains have since mostly returned to normal, the security threat in the Red Sea could see prices double over the next few weeks, say analysts. Global freight rates were already rising again after the Panama Canal last month curbed the number of vessels that could ply the waterway that connects the Atlantic and Pacific oceans due to a drought.

Fortunately, the shipping industry has learned the lessons from the post-COVID supply chain crisis and many firms have expanded their fleet of cargo vessels, meaning the impact of any lasting Red Sea rerouting won't be as disastrous.

"Right now we have an overcapacity of container vessels, so in the absolute worst case, where we have to continue to go around Africa for a time, we do have the container vessels in the world to do this," Jensen said.

For the first few days of the current crisis, shipping firms had kept their vessels in a holding pattern in the hope that the attacks would be curtailed or security in the region would be quickly increased. 

"This week, more and more vessels are being redirected to go around Africa, which seems to indicate the carriers are beginning to lose faith that this crisis can be resolved very rapidly," Jensen added.

US pushes naval coalition as Yemen rebels vow to attack more ships

US, allies step up naval security

On Tuesday, the United States announced a multi-nation operation to safeguard maritime commerce in the Red Sea. As part of the measure, Britain, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles and Spain will stage joint patrols in the southern Red Sea and the Gulf of Aden.

US and British warships in the area have begun shooting down Houthi missiles and drones in recent days. However, it is unclear whether the presence of a larger naval force will be enough to halt the attacks altogether.

Some ships are, however, continuing to ply the Red Sea, albeit with armed guards on board, in case their vessels are boarded by Houthi rebels, who insisted Tuesday that the US-led security operation would not deter them.

"[With Ever Given] it was easy to see that it would soon be resolved. This is more tricky because what is it going to take to get the Houthis to stop launching missiles and drones at the ships, especially as they are drawing attention to the [Israel-Hamas] conflict?" Jensen told DW.

Shipment delays won't affect Christmas shopping, but there is the potential for stores to run low on stock by February if the delays continue, supply chain research firm Project44 said in a note on Tuesday.

Other analysts have warned that while container shipping may be hit harder overall, the delay to vessels carrying fossil fuels to Europe may be felt first.

"We see energy shipments being impacted right here, right now — whether that's oil or coal or gas — simply due to winter in the northern hemisphere," Sand told DW. This could lead to a knock-on effect on energy prices.

Top News / World+Biz

Red Sea / Global supply chain / Shipping / Houthi attacks / Yemen Houthis

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • BNP Acting Chairperson Tarique Rahman and Chief Adviser  Muhammad Yunus meet at Dorchester Hotel in London, UK on 13 June 2025. Photo: CA Press Wing
    National polls possible in 2nd week of February, agree Yunus, Tarique in 'historic' London meeting
  • Rescuers work at the scene of a damaged building in the aftermath of Israeli strikes, in Tehran, Iran, June 13, 2025. Majid Asgaripour/WANA (West Asia News Agency) via REUTERS
    Tehran retaliates with 100 drones after Israel strikes Iran's nuclear facilities, kills military leaders
  • The flag of Russia. File photo: Collected
    Russia says Israel's attack on Iran was unprovoked and illegal

MOST VIEWED

  • Wreckage of a Boeing 787 Dreamliner showing part of its registration "VT-ANB" in Ahmedabad, India, June 12, 2025. REUTERS/Amit Dave
    Air India Dreamliner crashes into Ahmedabad college hostel, kills over 290
  • File Photo of Chief Adviser Muhammad Yunus: UNB
    Prof Yunus to receive Harmony Award from King Charles today
  • Bangladesh Bank Governor Ahsan H Mansur. TBS Sketch
    Bangladesh mulls settlements with tycoons over offshore wealth: BB governor tells FT
  • Railway seeks Tk2,000cr foreign loans to revive coach assembly, modernise workshops
    Railway seeks Tk2,000cr foreign loans to revive coach assembly, modernise workshops
  • UK Prime Minister Keir Starmer, Chief Adviser Muhammad Yunus
    Disclosure of unconfirmed Yunus-Starmer meeting shows ‘diplomatic imprudence’: Analysts
  • Brother sues Latifur's daughter, widow over alleged forgery to seize control of Transcom
    Brother sues Latifur's daughter, widow over alleged forgery to seize control of Transcom

Related News

  • National Action Plan to boost shipping sector competitiveness: Sakhawat
  • Six Russians dead, 39 tourists rescued after submarine sinks in Red Sea off Egypt
  • BSC plans to re-enter container shipping after over a decade
  • Record container, cargo handling: Ctg port, shipping ministry employees to get Tk60,000 incentive bonus each
  • Bangladesh's garment sector reforms driven by global supply chain pressure: Debapriya

Features

Photos: Collected

Kurtis that make a great office wear

19m | Mode
Among pet birds in the country, lovebirds are the most common, and they are also the most numerous in the haat. Photo: Junayet Rashel

Where feathers meet fortune: How a small pigeon stall became Dhaka’s premiere bird market

1d | Panorama
Illustration: Duniya Jahan/ TBS

Forget Katy Perry, here’s Bangladesh’s Ruthba Yasmin shooting for the moon

2d | Features
File photo of Eid holidaymakers returning to the capital from their country homes/Rajib Dhar

Dhaka: The city we never want to return to, but always do

4d | Features

More Videos from TBS

'Historic' meeting between Yunus and Tarique underway in London

'Historic' meeting between Yunus and Tarique underway in London

1h | TBS Today
Iran warns Israel of severe retaliation

Iran warns Israel of severe retaliation

2h | TBS World
Global oil prices soar

Global oil prices soar

3h | TBS World
What did Iran say in response to the Israeli attack?

What did Iran say in response to the Israeli attack?

4h | TBS World
EMAIL US
contact@tbsnews.net
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Advertisement
  • Privacy Policy
  • Comment Policy
Copyright © 2025
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - oped.tbs@gmail.com

For advertisement- sales@tbsnews.net