Red Sea Disruption Impacts Over 120 Boxships

Yemen’s Houthi rebels have been launching attacks for a month, causing a significant number of boxships to divert from the Red Sea-Suez Canal route. Instead, they are taking the longer route around the Cape of Good Hope, adding 1,900 nautical miles and 10 days to the journey. This route is not typically used by boxships, but due to the disruption, it is now being utilized by about 120 container ships totaling 700,000 TEU as of Wednesday morning.

The disruption is causing relief for container carriers’ shareholders, as it is expected to boost freight rates on the westbound Asia-Europe trade lanes. This is a rare prospect of profitability in an otherwise tepid, loss-making market for container carriers. As a result, share prices for shipping companies such as NYK, MOL, K Line, and Maersk have risen, with Maersk’s share price jumping by 20 percent in the last two weeks.

The disruption in the Red Sea-Suez Canal route is leading to a significant number of boxships diverting to the longer Cape of Good Hope route. This is causing relief for container carriers’ shareholders, as it is expected to boost freight rates and provide a rare prospect of profitability in an otherwise tepid, loss-making market. Share prices for shipping companies such as NYK, MOL, K Line, and Maersk have risen as a result of the disruption.

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