Following recent attacks in the Red Sea, shipping companies rerouting around Africa to avoid the Suez Canal are incurring additional costs. Fitch Ratings notes that while this poses financial challenges, potential disruptions could lead to increased freight rates, particularly for container shipping. Major players like Maersk and Hapag Lloyd have announced rerouting, and surcharges on Middle East routes have been introduced. The impact includes reduced vessel traffic through the Suez Canal and a potential 50% increase in travel time from the Far East to Europe. While disruptions may affect container contract rates, Fitch expects a limited medium-term impact on the global shipping supply-demand balance. The situation echoes past congestion issues but introduces new complexities, including higher operating costs and geopolitical considerations in the Red Sea.

SOURCE:GOOGLE