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Red Sea crisis to hit global shipping as China-Europe trade faces disruption

Red Sea crisis to hit global shipping as China-Europe trade faces disruption

Posted on December 26, 2023   |  

Shipping companies worldwide are hesitant about using the Suez Canal, causing concerns for China-Europe trade and putting pressure on business costs.

Major shipping groups like Maersk Line, Hapag-Lloyd AG, and CMA CGM SA have suspended voyages due to security worries in the Red Sea region.

To avoid the Suez Canal, cargo ships are taking longer routes around the Cape of Good Hope, resulting in higher sailing costs, longer shipping times, and delivery delays.

Ships heading to Europe now take 10 more days on average due to circumnavigating the Cape of Good Hope, while trips to the Mediterranean take an extra 17 to 18 days.

As of December 18, global shipping rates for a 40-foot container have increased by $600 on routes to the Middle East and Europe, settling between $2,500 and $2,600.

Freight rates between Chinese and European ports are expected to rise significantly due to increased shipping costs. 

Routes from Zhejiang to the Middle East have surged from over $2,000 to over $3,000, projected to rise to $4,000 soon.

Prices for shipping along Middle Eastern, European, and Mediterranean routes are predicted to keep rising in January, leading shipping companies to discuss renegotiating export shipping rates on these routes.



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