According to Nomura analysts, there is also a warning about low water levels in the Panama Canal, in Central America.
The global supply chain faces new challenges due to Houthi attacks on ships in the Red Sea, forcing them to divert the region's route, and low water levels in the Panama Canal, in Central America.
The latest report from the Japanese bank Nomura says “the Red Sea has strategic relevance for trade, as it is the only route to the Suez Canal”.
According to the Bloombergaround 12% of world trade passes through the Suez Canal, including up to 30% of container traffic.
“It is important to highlight that the Suez Canal offers the shortest maritime route between Asia and Europe, with approximately 40% of trade passing through the canal. About 8-10% of the world's oil and 8% of natural gas passes through the Red Sea. More time and transit costs”say Nomura analysts.
“The route change increases the transport distance by approximately 30% and adds between 7 and 10 days to the transport time in each direction, resulting in longer journeys and delays in deliveries.”they stated.
“Transportation costs have also increased due to rising freight rates, labor costs and insurance premiums, and equipment shortages are likely as empty containers are removed. It is understandable that the impact on transportation costs has been greater in Asia and Europe than in the United States,” Nomura said.
According to the report, the WCI composite freight index (World Container Index, in Portuguese) rose almost 150% on January 18 (since December 14, 2023).
Freight rates from China (Shanghai) to Europe (Rotterdam) increased by 243% during the same period. Excluding the pandemic era when shipping costs soared, these are the highest shipping rates since the series began in 2011.
In addition to rising shipping costs, there has been a rise in insurance rates, especially for ships from the United States, United Kingdom and Israel.
According to the report, Europe appears to be the most affected region. Automobiles, the sector. “This is mainly due to the fact that EU car manufacturers [União Europeia] depend heavily on Asia for the supply of electric vehicles and there is a delay in the delivery of manufacturing materials and components from Asia”say Nomura experts.
“Some large European retailers who source products from China, Bangladesh and India have also been affected, but it is not yet a widespread problem”they add.
“In the case of automobiles, delays in shipping parts and components are causing reductions in production in Germany, Belgium, Spain and Hungary. For example, electric vehicle manufacturer Tesla announced that it will suspend some production activities at its Berlin facility from January 29 to February 11 as a result of supply issues caused by disruptions in the Red Sea.”say analysts.
With information from Investing Brazil
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