Shipping companies are facing the full impact of the escalating Red Sea crisis

The crisis in the Red Sea has escalated following coalition bombing in Yemen to protect shipping routes. Xeneta reports that it now costs $1,000 per container to transport goods across the Cape of Good Hope, excluding the Suez Canal. Shipping companies are hesitant to return to the Red Sea until they are confident it is safe, and they may need to adjust their networks if the crisis continues for more than six months.

Peter Sand, chief analyst at Xeneta, warns that rising rates – which have reached $5,300 to $5,500 per TEU – will have a disproportionate impact on smaller shippers who are less equipped to handle the disruption to supply chains. While the Cape route offers some cost savings, such as lower insurance and Suez Canal fees, the longer trip leads to additional expenses for fuel and charter rates, totaling about $1,000 per container.

As a result, the crisis in the Red Sea is increasing the cost and complexity of shipping, particularly for smaller companies, and may lead to changes in shipping networks in the long run.

Source .