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Disruptions to shipping from the Houthi attacks in the Red Sea already are more damaging to the supply chain than the early COVID-19 pandemic, maritime advisory firm Sea-Intelligence said this week in an analysis of vessel delays.
Supply chain data known in the industry as “vessel capacity” shows the second largest drop in recent years, surpassed only when the giant Ever Given cargo ship was stuck in the Suez Canal for six days during March 2021, which halted billions of dollars in trade.
With that exception, the Red Sea crisis is “the largest single event – even larger than the early pandemic impact,” according to Sea-Intelligence CEO Alan Murphy.
The longer transit around the Cape of Good Hope is having a significant impact on vessels available to pick up containers, but unlike during the pandemic, there is excess vessel capacity now unused which could be put back into service.
Murphy said he expects ocean carriers will add vessels into their rotation after the Chinese New Year.
The Red Sea diversions are beginning to have a major impact on energy markets and product tanker rates, Clarksons shipping analyst Bendik Folden Nyttingnes told CNBC, noting “several routes out of the Middle East Gulf are showing double-digit gains.”
Companies including Torm (TRMD), Hafnia (OTCQX:HAFNF), Ardmore Shipping (ASC) and Scorpio Tankers (STNG) would benefit if product tanker rates rose, according to Nyttingnes.
Frontline (NYSE:FRO) and Euronav (EURN) recently joined the list of companies that said they will pause all Red Sea transit until further notice.
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Meanwhile, Honour Lane Shipping said it is “informally” predicting the crisis will last 6-12 months, and “if so, we expect the soaring freight rates and equipment shortage will continue until the third quarter,” the company said.
Image and article originally from seekingalpha.com. Read the original article here.