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According to the maritime advisory firm Sea-Intelligence, the current disruptions in shipping due to the Houthi attacks in the Red Sea have surpassed the early strains of the COVID-19 pandemic, presenting a more significant impact on the supply chain.
The analysis of vessel delays, known as “vessel capacity,” indicates the second-largest drop in recent years, with the exception being the six-day blockade caused by the Ever Given cargo ship in the Suez Canal during March 2021, which resulted in billions of dollars in trade coming to a halt.
Sea-Intelligence CEO Alan Murphy emphasized the severity of the situation, stating that the Red Sea crisis constitutes “the largest single event – even larger than the early pandemic impact.”
The prolonged transit around the Cape of Good Hope has led to a significant reduction in available vessels for container pick-up. However, unlike the pandemic period, there is currently excess vessel capacity that remains unused but could potentially be reintroduced into service.
Murphy anticipates that ocean carriers will incorporate additional vessels into their rotation following the conclusion of the Chinese New Year.
Data also suggests that the Red Sea diversions have started to significantly impact energy markets and product tanker rates. Clarksons shipping analyst Bendik Folden Nyttingnes highlighted the substantial rise in several routes out of the Middle East Gulf, indicating double-digit gains.
As a result, companies such as Torm, Hafnia, Ardmore Shipping, and Scorpio Tankers stand to benefit from potential increases in product tanker rates, according to Nyttingnes.
Furthermore, Frontline and Euronav recently announced their decision to suspend all Red Sea transit until further notice. Honour Lane Shipping has “informally” suggested that the crisis may persist for 6-12 months. If this prediction materializes, the company believes that soaring freight rates and equipment shortages will persist until the third quarter.
Amidst these developments, an ETF (BOAT) may also be impacted significantly.
