The maritime crisis in the Red Sea is no longer so much (or not only) a problem of supplies, but of prices and costs, which can skyrocket. And, ultimately, it will have an impact on inflation and delay the reduction in interest rates already planned by central banks. These are some of the consequences of the military attack by the United States and the United Kingdom on Yemen last morning, with the aim of hitting the Houthi rebels who have been blocking the transit of shipping companies through the Suez Canal for a month with terrorist acts.
Maritime rates, which have tripled in the last month, are starting to create problems for shippers. “The shipping companies act like an oligopoly and have turned a local problem into something global. They apply a surcharge of $2,000 per container on any route, when it comes to extending navigation by only 10 days,” explains Jordi Espin, general secretary of Transpime (Spanish Association of Loading Companies). “Often when they arrive in Europe they leave the merchandise in distribution centers like Tangier or Gibraltar instead of port cities like Genoa, Valencia or Barcelona. In these circumstances, it is now impossible for companies to plan routes and logistics, because in addition punctuality, which was almost 80%, has dropped to 59%,” he adds.
According to Alan Murphy, CEO of the consulting firm Sea-Intelligence, “these interruptions have nothing to do with those caused during the pandemic. But the current capacity outlook is plagued by a high degree of uncertainty and shippers could face a capacity crisis for Asian exports in the coming weeks.”
According to their calculations, shipping companies, by reorienting their navigation plans, may reduce cargo capacity by up to 40% in the week of January 22. Some 350 ships have changed routes and almost eight out of every ten ships that transited the area now prefer to pass through the Cape of Good Hope.
The International Monetary Fund (IMF), which has tools that monitor maritime traffic in real time (PortWatch), has detected, for example, that traffic in the Suez Canal “has decreased by 28% year-on-year in the 10 days prior to 2 January and also shows “that shipping volumes passing through the Cape of Good Hope increased by 67%.” The most affected sectors are petroleum products, chemicals and non-metallic minerals.
“Both shipping times and costs for exporters and importers are increasing and this could renew upward pressure on prices,” Fund spokesperson Julie Kozack said in a press conference. The Red Sea, she recalled, represents 10% of global trade flows.
In the markets, oil rose nearly 2% yesterday. 20% of the world's crude oil consumption passes through these waters. “If a large portion of the Strait of Hormuz flows were to stop, it would have up to three times the impact of the oil price crisis of the 1970s [which rose by 300%],” Saul Kavonic, an analyst, told Reuters. MST Marquee energy source.
But can inflation (2.9% in the eurozone and 3.4% in the United States, still far from the 2% target) really pick up again as a result of the Yemen crisis? It is not clear. Rubén Segura-Cayuela, an economist at Bank Of America, stated in a recent note that, unlike the pandemic, with now weaker demand in the euro zone and a restrictive policy, “it is more likely that business margins will absorb a part significant transportation costs than a couple of years ago.”
Another study prepared by Oxford Economics recalled that the IMF already said at the time that inflation can rise by 0.7% each time freight prices double. However, compared to the Covid era, these analysts believe that trade will stagnate in the first part of the year, there will not be skyrocketing demand like then, and inventories are more robust. since only 20% of companies report suffering supply problems (in 2020 the percentage was 70%).
Among those that do have a shortage of materials, the automobile manufacturer Volvo, which announced yesterday that it will interrupt production at its Belgian plant in Ghent for three days next week due to the delay in the arrival of components via the Red Sea. Tesla will do the same, but for two weeks, at its factory in Germany. Previously, Michelin had to stop due to lack of rubber
