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Article; The Global Supply Chain Pressure Index and the “Smooth Lines” Fallacy
https://liquidtime.substack.com/p/the-global-supply-chain-pressure?utm_source=substack&publication_id=537128&post_id=146544135
Variations of the sentence “the pandemic and the blockage of the Suez canal by the Ever Given brought the world’s supply chains to light” are, generally, annoying, although there is admittedly some truth to them. Shipping was not particularly on the news agenda several years ago. Running a search for news articles in 2019 that contain the phrase “Global Shipping” pulls up 1830 results. Running the same search for subsequent years sees that figure more than double 4800 in 2021, and rise to 5260 for 2023. In the last few years, Bloomberg have hired dedicated logistics reporters, and other news outlets are starting to consider supply chains as its own beat rather than just a dull branch of business news.
https://liquidtime.substack.com/p/the-global-supply-chain-pressure?utm_source=substack&publication_id=537128&post_id=146544135
Variations of the sentence “the pandemic and the blockage of the Suez canal by the Ever Given brought the world’s supply chains to light” are, generally, annoying, although there is admittedly some truth to them. Shipping was not particularly on the news agenda several years ago. Running a search for news articles in 2019 that contain the phrase “Global Shipping” pulls up 1830 results. Running the same search for subsequent years sees that figure more than double 4800 in 2021, and rise to 5260 for 2023. In the last few years, Bloomberg have hired dedicated logistics reporters, and other news outlets are starting to consider supply chains as its own beat rather than just a dull branch of business news.
Report; A Metric of Global Maritime Supply Chain Disruptions
https://documents1.worldbank.org/curated/en/099746107032431443/pdf/IDU19447dab513757140b1193cd19643f0ab7c10.pdf
In recent years, containerized trade, the backbone of global value chains, has experienced unprecedented disruptions. For instance, the COVID-19 pandemic created unforeseen consequences in a far-ranging array of sectors on a global scale, triggering an unprecedented supply chain crisis from late 2020 to mid-2022. Surging trade demand surpassed shipping capacity, itself affected by massive operational disruptions in key ports. In 2023, there were two events of global relevance. First, a severe drought affected the operation of the locks in the Panama Canal, resulting in a reduction in throughput and restricting the size of vessels able to transit the canal. Later in the year, militant groups carried out attacks in the Red Sea, forcing shipping lines to reroute ships servicing the Asia-Europe and Asia-US East Coast trade routes through the Cape of Good Hope.
https://documents1.worldbank.org/curated/en/099746107032431443/pdf/IDU19447dab513757140b1193cd19643f0ab7c10.pdf
In recent years, containerized trade, the backbone of global value chains, has experienced unprecedented disruptions. For instance, the COVID-19 pandemic created unforeseen consequences in a far-ranging array of sectors on a global scale, triggering an unprecedented supply chain crisis from late 2020 to mid-2022. Surging trade demand surpassed shipping capacity, itself affected by massive operational disruptions in key ports. In 2023, there were two events of global relevance. First, a severe drought affected the operation of the locks in the Panama Canal, resulting in a reduction in throughput and restricting the size of vessels able to transit the canal. Later in the year, militant groups carried out attacks in the Red Sea, forcing shipping lines to reroute ships servicing the Asia-Europe and Asia-US East Coast trade routes through the Cape of Good Hope.
Paper; The Red Sea link. Geo-economic projections
https://cadmus.eui.eu/bitstream/handle/1814/72105/QM-03-21-328-EN-N.pdf
The Red Sea region is becoming increasingly important in global geopolitics. Given its importance for global trade and security, growing geo-economic projections, military rivalries and the risk of confrontation between key regional players and international actors are growing and could have far-reaching and disruptive repercussions. This paper explores the critical economic and security issues that link littoral, regional and international powers to the Red Sea region. It shows how efforts by countries in the broader Gulf region and external powers to extend their influence to the Red Sea and the Horn of Africa can produce a potential new conflict zone. It concludes by offering some reflections on how to promote regional security and economic development in the region, with a view to minimising the risk of conflict and increasing opportunities for cooperation
https://cadmus.eui.eu/bitstream/handle/1814/72105/QM-03-21-328-EN-N.pdf
The Red Sea region is becoming increasingly important in global geopolitics. Given its importance for global trade and security, growing geo-economic projections, military rivalries and the risk of confrontation between key regional players and international actors are growing and could have far-reaching and disruptive repercussions. This paper explores the critical economic and security issues that link littoral, regional and international powers to the Red Sea region. It shows how efforts by countries in the broader Gulf region and external powers to extend their influence to the Red Sea and the Horn of Africa can produce a potential new conflict zone. It concludes by offering some reflections on how to promote regional security and economic development in the region, with a view to minimising the risk of conflict and increasing opportunities for cooperation
Global Ocean Carriers Halt Red Sea Transits – What to Expect
https://www.flexport.com/blog/global-ocean-carriers-halt-red-sea-transits-what-to-expect/
As of today, 389 carrier vessels accounting for 5.4 million TEUs of capacity are actively diverting, will divert, or have already diverted from the Suez Canal as a direct result of these attacks.
After Maersk’s decision on December 31 to re-pause transits through the high-risk areas, they are now diverting vessels that were idling south of the Gulf of Aden towards the southern tip of Africa.
COSCO is also now routing most vessels around the Cape of Good Hope but continues to assess on a vessel-by-vessel basis. See the below visual in which COSCO’s vessels are in yellow.
Some carriers are deploying vessels that typically service other trades like Asia to North America and LATAM to Asia to Europe trades to compensate for service disruptions. Today alone, we saw 4 vessels across HMM and Hapag-Lloyd accounting for 33k TEUs of capacity that will be deployed on the Asia to North Europe and Mediterranean trades. Vessel deployment will help, but not solve capacity constraints. Equipment shortages at origin ports are expected to rise in the coming weeks as the impacts of service disruptions make their way downstream.
The military coalition aimed at protecting the risk areas now consists of 12 nations. On Wednesday, the coalition warned Houthis of ‘consequences’ for continued attacks in the region. From the White House, “The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways.”
https://www.flexport.com/blog/global-ocean-carriers-halt-red-sea-transits-what-to-expect/
As of today, 389 carrier vessels accounting for 5.4 million TEUs of capacity are actively diverting, will divert, or have already diverted from the Suez Canal as a direct result of these attacks.
After Maersk’s decision on December 31 to re-pause transits through the high-risk areas, they are now diverting vessels that were idling south of the Gulf of Aden towards the southern tip of Africa.
COSCO is also now routing most vessels around the Cape of Good Hope but continues to assess on a vessel-by-vessel basis. See the below visual in which COSCO’s vessels are in yellow.
Some carriers are deploying vessels that typically service other trades like Asia to North America and LATAM to Asia to Europe trades to compensate for service disruptions. Today alone, we saw 4 vessels across HMM and Hapag-Lloyd accounting for 33k TEUs of capacity that will be deployed on the Asia to North Europe and Mediterranean trades. Vessel deployment will help, but not solve capacity constraints. Equipment shortages at origin ports are expected to rise in the coming weeks as the impacts of service disruptions make their way downstream.
The military coalition aimed at protecting the risk areas now consists of 12 nations. On Wednesday, the coalition warned Houthis of ‘consequences’ for continued attacks in the region. From the White House, “The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways.”
Article; More than 100 container ships rerouted from Suez canal to avoid Houthi attacks
https://www.theguardian.com/business/2023/dec/20/more-than-100-container-ships-rerouted-suez-canal-red-sea-houthi-attacks-yemen
More than 100 container ships have been rerouted around southern Africa to avoid the Suez canal, in a sign of the disruption to global trade caused by Houthi rebels attacking vessels on the western coast of Yemen. The shipping company Kuehne and Nagel said it had identified 103 ships that had already changed course, with more expected to go around South Africa’s Cape of Good Hope. The diversion adds about 6,000 nautical miles to a typical journey from Asia to Europe, potentially adding three or four weeks to product delivery times.
https://www.theguardian.com/business/2023/dec/20/more-than-100-container-ships-rerouted-suez-canal-red-sea-houthi-attacks-yemen
More than 100 container ships have been rerouted around southern Africa to avoid the Suez canal, in a sign of the disruption to global trade caused by Houthi rebels attacking vessels on the western coast of Yemen. The shipping company Kuehne and Nagel said it had identified 103 ships that had already changed course, with more expected to go around South Africa’s Cape of Good Hope. The diversion adds about 6,000 nautical miles to a typical journey from Asia to Europe, potentially adding three or four weeks to product delivery times.
Article; Why shipping should be worried about soaring ocean temperatures
https://splash247.com/why-shipping-should-be-worried-about-soaring-ocean-temperatures
The biggest threat to the commercial shipping sector from the warming seas will be the increased frequency and intensity of weather hazards driven by ocean warming. These include more intense hurricanes, heavier rainfall and snowstorms as well as shifts in weather patterns so much so that some areas face rainstorms and flooding while others face worsening drought conditions and wildfire risks. There is no need to look further than the drought and water shortages at the Panama Canal which make passage through the canal less reliable and delay vessels.
https://splash247.com/why-shipping-should-be-worried-about-soaring-ocean-temperatures
The biggest threat to the commercial shipping sector from the warming seas will be the increased frequency and intensity of weather hazards driven by ocean warming. These include more intense hurricanes, heavier rainfall and snowstorms as well as shifts in weather patterns so much so that some areas face rainstorms and flooding while others face worsening drought conditions and wildfire risks. There is no need to look further than the drought and water shortages at the Panama Canal which make passage through the canal less reliable and delay vessels.