Shipping lines reroute vessels in the wake of Red Sea attacks

On Wednesday, 3 January 2024, the United Nations (“UN”) Security Council convened a meeting to discuss the continuing attacks against commercial shipping in the Red Sea, which are posing a significant threat to global supply chains and the stability of the region. The meeting came in the wake of numerous attacks launched against international vessels navigating in the Red Sea. According to Mr Arsenio Dominquez, Secretary General of the International Maritime Organization, approximately 18 shipping companies have reportedly decided to reroute their vessels around the Cape of Good Hope, South Africa to reduce risks, with an increased transit time of around 12 days. This is resulting in higher freight rates and a negative impact on trade, with further disruptions to maritime supply chains expected in weeks to come. 

The Red Sea is a vital shipping lane linking Europe and Asia, which records some 15% of international shipping trade, including 8% of global grain trade, 12% of seaborne-traded oil and 8% of the world’s liquefied natural gas trade[1]. Attacks have been noted on international vessels such as the MSC United and the Maersk Hangzhou in the Straits of Bab el Mandeb, the narrow stretch of sea connecting the Red Sea with the Gulf of Aden, which must be navigated to pass to and from the Suez Canal. A multinational maritime security initiative Operation Prosperity Guardian (OPG) has been set up and deployed to facilitate the passage of maritime commerce through the Red Sea and Gulf of Aden. The need for coordinated security efforts in the region was affirmed at an extraordinary meeting held in December by members of the Djibouti Code of Conduct (DCoC)[2]. 

This unprecedented situation, which shipping lines have been reportedly declaring as Force Majeure, has required shipping lines to swiftly reroute ships in Europe, taking account of the stowage configuration onboard and available berthing windows. Among others, diversions have been reported via the Cape of Good Hope and Jeddah. It is expected that this will trigger stiff competition for berthing rights in Europe, given the limited number of berths to handle large vessels. Disruptions are expected in terms of change in rotation and delays, the extent of which remains unclear given the lack of accurate data for the time being. Meanwhile, freight rates have already sharply increased for containers on routes from Asia to northern Europe and the Mediterranean, and with destinations in the Middle East region. In a stark reminder of the maritime crisis a couple of years ago, reports have shown that many contracts are no longer being honoured, with bookings being pushed to spot market rates.

FIATA recognises the exceptional situation in which supply chain actors are operating, and the challenges associated with rerouting vessels to ensure maritime safety and supply chain fluidity. Freight forwarders continue to play a crucial role in organising transport needs across the supply chain to find the most efficient and sustainable solutions amid the ongoing challenges. FIATA urges shipping lines to exercise care in the imposition of surcharges, noting reports of surcharges being levied in respect of unaffected destinations such as trade concerning the North Atlantic. This is crucial in the interests of ensuring fluidity of global supply chains, and preventing situations such as the recent maritime crisis.

Coordinated efforts are crucial to ensure business continuity, as well as maritime safety and security. Having recently obtained observer status at the IMO, FIATA echoes the IMO’s commitment to protect seafarers, ships and cargoes, and stands ready to support all such initiatives aimed at strengthening communication among concerned actors.

[1] The White House, 'A Joint Statement from the Governments of the United States, Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, New Zealand, Republic of Korea, Singapore, and the United Kingdom', 3 January 2024 (last accessed 5 January 2024)

[2] Djibouti Code of Conduct, 'Meeting Overview: The Extraordinary Meeting of DCoC NFPs to Discuss how to deal with increasing threats against International Shipping in the Red Sea Area', 19 December 2023 (last accessed 5 January 2024)