On 15th and 16th December 2023, on the Red Sea – out side of Suez Canal have attacks on ships of Hapag-Lloyd and Maersk. Therefore, four major shipping companies, including Denmark's Maersk, Germany's Hapag-Lloyd, Switzerland's MCS and France's CMA CGM, have temporarily suspended operations across the Red Sea.
The Red Sea has the Suez Canal at its northern and the narrow Bab el-Mandeb strait at its southern, leading into the Gulf of Aden. It is a busy maritime route with ships passing through the Suez Canal to transport goods between Asia and Europe. Therefore, the Bab-el-Mandeb Strait along with Egypt's Suez Canal serve as important gateways for maritime trade between Europe and Asia.
After occurring attacks in the red sea, Shipping line Maersk instructed all Maersk vessels in the area bound to pass through the Bab el-Mandeb Strait to pause their journey until further notice.
Hapag-Lloyd said on Friday some of the company’s ships were asked to pause and drift outside the strait, a narrow stretch of water that links the Indian Ocean to the Red Sea. It’s also a key passage that enables ships to travel to Egypt’s Suez Canal.
Some companies like MSC and HMM have already rerouted around the Cape of Good Hope to avoid attacks, which adds cost and delay to global trade. The Red Sea is a crucial waterway, linking Europe and Asia. Currently, 12% of global trade passes through the Red Sea.
The fighting has increased war risk premiums in the Red Sea. This means carriers have to pay tens of thousands of dollars more in costs for a multi-day journey. So esitmate that USWC space and rates will get increase sharply.