Arab News Japan

TOKYO: Red Sea attacks could cut global shipping capacity by up to 20 percent, with supply chain disruptions, delays, and higher prices, according to a report by Japan’s Nikkei newspaper.

A series of ship attacks by Iran-backed Houthi rebels in the Red Sea has disrupted traffic to the Suez Canal and could cause further disruption, the report says, pointing out that at least 121 containerships have already opted to take longer routes to avoid the Suez Canal and the Red Sea.

Several ships have been attacked or threatened by drones and missiles since October 7.

Containerships account for 30 percent of cargo shipments, and $1 trillion worth of freight is carried by those vessels every year. An estimated 10 percent of the volume passes through the Suez Canal.

Denmark’s AP Moller-Maersk, Hapag-Lloyd of Germany and France’s CMA CGM have decided to halt navigation through the Red Sea, requiring ships to pass around the Cape of Good Hope at the southern tip of Africa, which could add an extra three to four weeks to shipping time.

“Shipping costs on the route will likely increase by around 15percent when allowing for fuel costs net of Suez Canal fees, while there’ll also be additional costs for insurance,” insurer S&P Global’s Chris Rogers was quoted as saying.

It is estimated that the higher shipping fees and the delays in arrivals will affect 47 percent of toys, about 40 percent of household appliances and 40 percent of clothing being shipped between Asia and Western economies.

It is also likely to affect supplies of chemicals, steel and insulated wires and batteries used in automobiles.