Tankers forced to take costly detour around the Cape of Good Hope to avoid hazards

LSEG Shipping Research’s recent report found that rerouting tankers around the Cape of Good Hope due to attacks in the Red Sea can result in nearly $1 million in additional costs per trip and double the transit time. The increased expenses are mainly due to higher fuel costs, leading to a 110% increase in total costs for Aframax tankers and a 35% increase for larger container ships traveling between Asia and northwest Europe.

The attacks on merchant ships and the Houthi conflict have caused a significant decline in transit through the Suez Canal, with a 32.6% drop in transits by January 2023. Daily container ship traffic in the Red Sea has also plummeted by almost 60%, with larger container ships experiencing an over 80% decline in transits. Despite these challenges, those still transiting the Red Sea are using AIS to broadcast deterrent messages and adhering to standard security protocols.

Fabrice Maille, the Global Head of Shipping at LSEG, emphasized the importance of the Suez Canal and the Red Sea for global trade, highlighting the significant impact of the conflict. He stressed the influential role of the Suez Canal and the Red Sea for global trade, as evidenced by the grounding of the Ever Given in 2021.

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