People watch as a vessel from the global shipping container company MSC departs Halifax Harbour in Halifax on Dec. 26, 2023.Darren Calabrese/The Canadian Press
Attacks by Houthis based in Yemen on ships in the Red Sea are delaying arrivals at the Port of Halifax and other terminals, driving up costs as vessels take longer routes to avoid the region.
Cargo ships travelling between Southeast Asia and Europe and North America are sailing around the southern tip of Africa as the Iranian-backed rebels launch missiles and drones in the passage that connects via the Suez Canal to the Mediterranean Sea.
The delays have forced shipping lines to deploy more vessels, crews, cargo containers and other equipment.
At the Port of Halifax, which receives vessels crossing the Atlantic Ocean from Europe, the Middle East and Southeast Asia, the longer route has pushed back the arrivals of most container ships in January. The online schedule shows many are several days late.
Paul MacIsaac, senior vice-president of the Halifax Port Authority, said the port is working with its partners to keep shipments moving.
“The shipping industry globally is being impacted by the situation in the Red Sea, and we are beginning to see some delays as shipping lines employ alternate routings around Africa,” Mr. MacIsaac said. “This has led to longer transit times and the need for additional ships and equipment being put into service. Accordingly, shipping rates are beginning to rise to cover these additional costs.”
The Houthis began attacking ships in the Red Sea in November, purportedly to demonstrate their support for Palestinians in Gaza amid the Israel-Hamas war. The United States and Britain have responded by striking Houthi missile launch sites in Yemen. The rebels struck a Greek freighter with a missile Tuesday; there were no reported injuries on the ship, which was headed to Israel from Vietnam.
The Harpex charter rates index, which tracks leasing prices for container ships, is up 10 per cent in January as shipping lines look for more vessels to replace those stuck in transit.
German container ship company Hapag-Lloyd is redirecting its liners around South Africa’s Cape of Good Hope, which adds a week to the transit time between Asia and the East Coast of North America and 12 days to Northern Europe. This is delaying arrivals of its ships in Halifax, Montreal and other ports, said Nils Haupt, a spokesman for Hapag-Lloyd.
The longer voyages also mean it can take longer to return the empty containers to Asian ports for refilling. This is on top of the additional fuel and labour costs, which are partly offset by avoiding the Suez Canal tolls, said Simon Heaney, an analyst at U.K.-based Drewry Shipping Consultancy Ltd.
The cost to ship a container from Shanghai to New York rose 35 per cent to US$5,600 this week from last week and 21 per cent, to US$6,300, to Genoa, Drewry said. The average price on eight major routes is up 82 per cent over the same week last year and is the highest since the pandemic-inflated price in October, 2022.
“It’s a bit of fear and panic,” Mr. Heaney said by phone.
Also driving up costs are the slower traffic on the world’s other major shipping lane, the Panama Canal, because of lower water levels, as well as strong demand for shipments ahead of the Chinese New Year shutdown, Mr. Heaney said.
Bob Ballantyne, a senior adviser at the Freight Management Association of Canada, which lobbies on behalf of major retailers and manufacturers, said he has heard from members that shipping costs are rising amid the disruptions. This is particularly acute for companies that receive goods at the Port of Halifax, he said.
Before long, his association’s members will be passing on those higher costs, Mr. Ballantyne said by phone from Ottawa. “It certainly will flow through to the consumer, that’s for sure.”