Red Sea crisis milder than pandemic; container shipping faces 2025 challenges.

Source: 5688.cn

The impact of the Red Sea crisis, though significant with a large increase in TEU-miles, is considered less severe than the Covid-19 disruptions. Clarkson's Container Intelligence Monthly reported an approximately 11% growth in TEU-miles, with around 620 vessels (8.5 million TEUs) rerouting from the Suez Canal to Cape of Good Hope to avoid Houthi rebel attacks. The global logistics bottleneck due to surging e-commerce sales and enhanced inspections amid the pandemic has somewhat mitigated the Red Sea's effects. While the Shanghai Containerized Freight Index (SCFI) reached 5110 points in January 2022, it has hovered around 2200 points recently. Clarkson's, the world's largest shipbroker, noted increased shipping costs but still lower than during the pandemic. Despite disruptions, the market remains substantial, and uncertainties persist about the duration of the crisis and the longevity of the current robust market conditions. Clarkson's emphasized monitoring the 'potential' supply-demand fundamentals, considering the Red Sea event a top agenda.

Despite substantial uncertainties, the container shipping industry is expected to face challenges in 2025, with over 2 million TEUs of new ships, equivalent to a 5% fleet growth.

Clarkson's warns that managing capacity might be difficult due to the cumulative supply growth, anticipating a 'robust' growth of around 3% in container trade this year, with potential relief from further slowing vessel speeds to alleviate supply pressures.

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