Fears of price rises caused by Red Sea attacks overblown, says expert

Ongoing attacks by Houthi militants in Yemen on vessels in the Red Sea have caused fears of large hikes in shipping costs, with rising costs being passed on to consumers.

Asia-to-North Europe rates more than doubled to above $4,000 per 40-foot container this week, with Asia-to-Mediterranean prices climbing to $5,175, according to Freightos, a booking and payments platform for international freight.

But a British shipping expert has told CGTN that fears of consumers facing large price rises are overblown. 

The attacks have been launched by rebels to show their support for Palestinian Islamist group Hamas fighting Israel in Gaza.

They impact a route vital to East-West trade, especially of oil, as ships use the Red Sea to access the Suez Canal.

In response, some of the world's largest shipping companies have diverted vessels around southern Africa's Cape of Good Hope, adding time and costs to voyages.

John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, insisted the majority of ships in the region have not been rerouted. 

He told CGTN: "We anticipate that there will eventually be knock-on price increases for those commodities for customers in the markets to which they're destined. However, it's important to note that shipping is still transiting the Red Sea. A majority of shipping that would ordinarily use that route is still going through it."

Stawpert added that the situation is less serious than the incident in March 2021 when the Ever Given vessel ran aground and blocked the Suez for six days, stopping all shipping. 

According to Stawpert: "The market will probably move to absorb the costs. It's not going to be across-the-board increases because we're still seeing shipping go through the Red Sea."

Stawpert said the launch of Operation Prosperity Guardian - a US-led international maritime security force formed last month to respond to the Houthi-led attacks - was also crucial. 

He said: "What one would anticipate based on the behavior of shipping in the face of this crisis is that the impact of Operation Prosperity Guardian will begin to be felt more and it will reassure shipping, and we will return to normal trade through that region.

"You will not see trade stop as a consequence of this aggression by the routes. And let's bear in mind the human aspects of this. The people on the front line here are seafarers. And it's them that are first and foremost in our thoughts as they face what is an unacceptable act on the part of the Houthis."

Security proposal

EU foreign policy chief Josep Borrell said on Wednesday he would present to member states a proposal to create a mission to contribute to security in the Red Sea.

Borrell told reporters in Lisbon that the proposal would require unanimity among member states.

Egypt's Suez Canal connects the Red Sea to the Mediterranean Sea and is the fastest way to ship fuel, food and consumer goods from Asia and the Middle East to Europe. Shippers use the route to ferry about one-third of all global container cargo, including toys, tennis shoes, furniture and frozen food.

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