The shipping industry is facing a tough decision due to attacks on the Red Sea by the Houthi militia in Yemen. Ship owners have to choose between risking attacks and higher insurance fees by using the Red Sea, or taking a longer route via Africa that adds 10 days and burns more fuel. The disruption has already affected the global supply chain, leading to delays in product deliveries, higher costs, and increased insurance fees.
Ships that carry a large number of containers can handle the extra costs, but smaller vessels may find it unaffordable to take the longer route. Even before the Red Sea troubles, daily charter rates for transporting cars had increased significantly.
Major shipping companies have reduced their presence in the Red Sea as a result of the attacks. As a result, the number of vessels in the area has decreased. The disruption has also impacted the Panama Canal, forcing more ships to take the longer route to the United States.
The cost of transporting a container from China to the U.S. has increased as a result of the disruptions. Despite the challenges, it is expected that the industry will be able to cope with the current disruption, although the effect is significant. The disruption is occurring at a time when the global supply chain had just begun to recover from previous disruptions caused by the pandemic.
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