Over 120 Boxships Affected by Red Sea Disruption

After a month of attacks by Yemen's Houthi rebels, the number of boxships diverting away from the Red Sea-Suez Canal route is reaching epic proportions, according to freight forwarding insiders. This backbone of east-west trade is suddenly taking a back seat to the traditional route around the Cape of Good Hope, which adds 1,900 nautical miles and 10 days onto a typical Asia-North Europe container service. 

According to top forwarder Kuehne+Nagel, there are about 120 container ships totaling 700,000 TEU taking the Cape route as of Wednesday morning. This passage is made regularly by VLCCs and Capesize bulkers, which cannot fit through the Suez Canal, but is almost never used by boxships with their valuable and time-sensitive cargoes. The only other time in recent shipping history when boxships made a mass U-turn towards Africa's southern tip was in 2021, when the boxship Ever Given went aground and fully blocked the Suez Canal for five days. 

The disruption will come as welcome relief for container carriers' shareholders. About six percent of all global cellular transport capacity could be affected by the Red Sea disruption, absorbing some of the excess tonnage and significantly boosting freight rates on the westbound Asia-Europe trade lanes. In an otherwise tepid, loss-making market, this high-volume route is now providing a rare prospect of profitability for container carriers.

Share prices for some shipping companies have risen over the past few weeks, including NYK, MOL, and K Line - all up by about 5-6 percent since the start of the disruption. Maersk, which was among the first lines to announce plans to divert away from the Suez Canal, has seen its share price jump by 20 percent in the last two weeks.