Red Sea shipping crisis: Freight through Suez Canal down 45 per cent since Houthi attacks 

Freight passing through the Suez Canal has declined by 45% in the past two months following attacks by Yemen’s Houthis. These attacks prompted shipping groups to redirect freight, causing disruptions in already strained maritime trading routes, according to United Nations Conference on Trade and Development (UNCTAD), a UN agency supporting developing countries in global trade. UNCTAD raised concerns about the potential consequences of this decline, including risks of higher inflation, uncertainties in food security, and increased greenhouse gas emissions. Shipping companies have diverted ships from the Red Sea as a response to attacks by the Iran-aligned Houthi movement, which supports Palestinians in Gaza. In response, the United States and Britain have conducted air strikes against the Houthis. The agency said 39% fewer ships than at the start of December transited the canal, leading to a 45% decline in freight tonnage. Jan Hoffmann, UNCTAD’s head of trade logistics, said there were now three key global trade routes disrupted, also including flows of grain and oils since Russia’s invasion of Ukraine, and the Panama Canal, where low water levels from drought meant shipping last month was down 36% year-on-year and 62% from two years ago. “We are very concerned,” he told a briefing late on Thursday. “We are seeing delays, higher costs, higher greenhouse gas emissions.” Emissions were rising, he said, because ships were opting for longer routes and also travelling faster to compensate for detours. The Suez Canal handles 12-15% of global trade and 25-30% of container traffic. Container shipments through the canal were down 82% in the week to Jan 19 from early December, while for LNG, the decline was even greater. The drop-off for dry bulk was smaller and crude oil tanker traffic was very slightly higher. Spot container rates recorded their sharpest weekly increase of $500, affecting not just Asia-to-Europe shipments but also the non-Suez route to the U.S west coast, which has more than doubled. However, rates were still only about half of the peak hit during the COVID-19 pandemic. Hoffmann said food prices could feel the impact, adding about half of the increases seen since the war in Ukraine were due to higher transport costs, although end-consumers in developed countries may take some time to see an effect. “Passing on these higher freight rates to consumers takes time, up to a year until… we would really see them in the shop, whatever shop - Ikea, Walmart or something,” he said. With inputs from Reuters.