Freight rates from Asia have spiked by 53% in a month depending on the route plus container shipping giants. Moreover, carriers like British Petroleum have halted transit via the Red Sea-Suez Canal route after the attacks, the latest Freightos data says.
The disruption assumes significance as Bab-el-Mandeb Strait, which connects the Mediterranean Sea to the Arabian Sea via the Red Sea and the Suez Canal. This area is vital for 30% of global container traffic.
Reports suggest that a majority of the insurance companies have refused to cover shipments crossing the Red Sea after Yemen-based Houthi militants hit a Liberian-flagged ship Palatium III with an anti-ship ballistic missile, and some insurers have started to levy a $5,200 war risk surcharge over and above the freight charges.
Madhavi Arora, Lead Economist of Emkay Global, says that this will affect the oil, gas, auto, chemicals, and logistics industries.
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