The offshoot conflict in the Red Sea has meant higher freight costs and increased expenses for insuring commercial trade goods.
Moreover, moves to avoid the Suez Canal for safety reasons and instead navigate around the Cape of Good Hope, have greatly increased travel times and led to significantly higher fuel consumption.
Simon MacAdam, an analyst at the London-based financial consulting firm Capital Economics, says shipping companies are being forced to become more flexible.
“The shipowners have seemingly adapted quite well to the situation, considering the limitations on using the Suez Canal,” he told DW, adding that costs briefly dropped this spring “after skyrocketing in January.”
Shipping bulk commodities like wheat or liquefied natural gas (LNG) across the US is economically unviable, he added, leaving shippers with no alternative to the very long and dangerous detour route around Cape Horn on the southern tip of South America.
Water levels in the canal, he told DW, have “recovered somewhat” in recent months, and the La Nina weather phenomenon should “further ease the situation soon.”
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