Today we explore the sustainability costs of the unfolding crisis in the Red Sea and its impact on shippers and shippers.
In response to Israeli aggression in Gaza, the Iranian-backed Houthis in November launched attacks on cargo ships transiting the Suez Canal in the Red Sea. Ever Given ship blockade in 2021 caused widespread global trade issues. This attack is more like a military tactical mission, causing confusion and security concerns for the people. The world's largest shippers such as Maersk, MSC, and Evergreen.
Half of the world's container ship fleet plyes the Red Sea. Avoid routes due to fear of attack.almost 15 percent of world trade Go through the route. Additionally, the Suez Canal accounts for a significant portion of global energy trade, with 12 percent of traded oil and 8 percent of liquefied natural gas passing through it.
Hung Tran, a non-resident senior fellow at the Atlantic Council Center for Geoeconomics, told Time magazine: „The Red Sea route through the Suez Canal is the shortest, cheapest and most convenient route connecting Asia and Africa to Europe via the Mediterranean. It's an effective method.“
of US and British forces launched airstrikes across Yemen in retaliation late last week, and the situation continues to further escalate., President Joe Biden said, „These targeted attacks send a clear message that the United States and our partners will not condone attacks on our personnel or allow adversaries to jeopardize our freedom of navigation.'' It's a great message.“ In response, the Houthis announced they would continue to attack ships supporting Palestinians against Israel, with no end in sight. Following this, the United States US-flagged ships warned to stay away from parts of the Red Sea.
Sustainability impact
As of January 8th, Airlines had already misappropriated more than $200 billion in trade.. It added that while operations in the region had not been completely halted, ships that did not risk transiting through the Suez Canal would have to reroute around South Africa's Cape of Good Hope. 10-14 days Voyages typically last 4 to 6 weeks.
Gabriel Reed, associate director of the strategic intelligence practice at S-RM, a global corporate intelligence and cybersecurity consultancy, told me via email that this reroute has implications for sustainability. is involved.
„Due to ongoing security concerns in the Red Sea, rerouting the ship around South Africa's Cape of Good Hope will add approximately 3,000 nautical miles to the voyage,“ Reid said. “Lengthening routes and increasing speeds to minimize schedule pressures increases fuel consumption and, inevitably, emissions.”
Cargo owners can reduce their impact on emissions through slow steam operation, where operators run their vessels' engines at lower speeds to conserve fuel and reduce operating costs. But this „only exacerbates the 'just-in-time' scheduling problems and delays,“ Reid said. Just-in-time is a common strategy to minimize inventory carrying costs and optimize efficiency.
increases complexity
The need to reroute ships now is particularly important due to the complexity of how cargo shippers will respond to the European Union's Emissions Trading System (ETS). “As of January 1, 2024, in the EU ETS, maritime emissions are included in the ETS of ships calling at EU ports, and the longer the route, the higher the levy on ships subsequently calling at European ports. „It means an increase in the number of people,“ Reid said. A port call is a scheduled call at a port by a ship.
What is unclear is how much of an impact the route changes will have on shippers' Scope 3 emissions. The scale of the impact on emissions and the impact of these disruptions on corporate sustainability goals will depend on how long the problem persists.
Even a temporary suspension of maritime activity in the Red Sea for several weeks would have real and immediate consequences around the world.