Shipping costs rise nearly $300 Bln in week due to Red Sea attacks
Business
Global shipping costs soared by over $186 billion last week due to rising fuel prices. Shipowners predict that cost increases may continue throughout the week amid recent security concerns along the Red Sea route.
A report published by the International Chamber of Shipping (ICS) on January 30 revealed that shipping costs had risen almost 50% overnight to $186 billion. The shipowners association warned that this increase may become more severe in the coming days due to recent security incidents along the Red Sea.
In a press briefing earlier today, the chief executive of the ICS confirmed that the increase was largely due to higher fuel prices. In a statement attributed to him, the CEO explained that the global demand for oil has been declining in recent years, leading to a decrease in energy production. According to the report, the fuel prices have been increasing over the past few months, putting upward pressure on the cost of doing business at sea. This pressure was also exacerbated by increased competition in the market between different shipping lines. Moreover, the report stated that the ICS expects increased security incidents to continue occurring along the Red Sea route, which could lead to more delays in loading cargo and longer transit times. Due to these circumstances, the shipping costs have been rising rapidly. These include the cost of warehouse rental, insurance and taxes. As a result, the total price of goods moving from the port city of Mombasa to Europe has gone up by almost 25%. The biggest loser are African countries whose economies will continue to take a hit from the higher costs. Shippers who rely on shipping to get their goods to their customers may not be able to meet the deadline set by clients. The situation is expected to worsen as tensions continue to mount along the coasts of East Africa between Somalia, Kenya and South Sudan. In conclusion, the rapid rise in shipping costs is a big concern that should not be underestimated. It may get even worse if security incidents continue along the Red Sea route, as reported by Reuters.
