Suez Canal Situation: Impact on Prices and New Shipping Routes

The Current Situation in the Red Sea

Ships transiting the Suez Canal fear possible attacks by the Houthis, the Yemeni armed group that has targeted the boats in solidarity with the Palestinians, accusing the ships of providing support to Israel. As a result, some trade routes are avoiding the traditional passage through the Suez Canal.

As early as October 7, some vessels were subjected to attacks by the Houthis, who said they were acting against ships supporting Israel. This action was motivated by the armed group's solidarity with the Palestinians.

Impact on Global Trade and Red Sea Routes

The area affected by the attacks is crucial for global trade, with 12% of the world's goods passing through the Red Sea. Currently, a group of around 10 states, led by the United States and with Italy among them, are committed to ensuring the safety of merchant ships.

Route Diversions and Additional Costs

Due to the tense situation, many companies are opting for new routes that avoid the Red Sea and the Suez Canal. These alternative routes, which add 25 days to sailing time, represent a significant financial burden on the global economy, with costs in the billions due to the prolonged duration of transportation. From November 19 to December 17, 55 ships were diverted compared to the 2,128 that transited.

Economic Consequences and Calls for Intervention

The Suez Canal is crucial to world trade, with 12% of global cargo traffic and 9% of oil passing through this waterway. Therefore, any disturbance to this route can have a significant impact on shipping costs, insurance and oil prices.

The consequences of the current situation are reflected in a 60% increase in container shipping costs from Asia to Europe in just four weeks, along with increases in insurance rates and oil prices. The Italian Defense Minister, Guido Crosetto, urged timely intervention to avoid serious economic consequences, including the increase in raw material and energy prices, considering that 10% of global oil and gas passes through this route liquid.

Increase in prices of Spice brand products

Spice informs its customers that due to the growing tensions near the Suez Canal, which cause the lengthening of shipping routes (with the related huge costs), price increases for products on the market are expected from mid-January.