RED SEA ATTACKS DISRUPT GRAIN SHIPPING
Alexander Karavaytsev, a senior economist with the IGC, said the situation in recent weeks has caused ships transporting bulk commodities, such as grain, to divert deliveries away from the Suez Canal, which connects the Red Sea and the Mediterranean Sea. He said the volumes of grains and oilseeds transported via the canal during December were 20% lower than the previous month, and well below the same month in 2022 and the three-year average. Several of the world’s largest shipping firms — including Maersk, Hapag-Lloyd, and the Mediterranean Shipping Co. — have suspended shipping through the Suez Canal, a move that adds to the journey and the cost of shipping.
Karavaytsev said according to IGC estimates, re-routing from the EU and the Black Sea countries via the Cape of Good Hope at the southern tip of Africa “adds around 10 to 15 days to the journey time and around $6 to $8 per tonne to freight costs.” More than 7,000 miles to the west, the Panama Canal continues to be plagued by below-normal water levels due to drought. This has resulted in fewer dry bulk vessels navigating through the canal in recent months and larger grain-carrying ships being turned away. “The impact of Panama restrictions has been most evident for grains and oilseeds exports from the US Gulf, with some shipments diverted to alternative routes, including the Suez Canal,” he said. “This was the case for US soybeans, with volumes via the Suez spiking in recent months, before plunging more amid elevated security risks and seasonal trends.”
In 2022, ships carrying 36.18 million tonnes of grain — including corn, soybeans, rice, sorghum, barley, and wheat — transited the Panama Canal from the Atlantic Ocean to the Pacific Ocean and 2.2 million tonnes moved from the Pacific to the Atlantic. Grain is second only to petroleum among commodities that rely on the canal. Meanwhile, only 14% of the world’s grain and less than 5% of its soybeans pass through the Suez Canal each year, according to an analysis by Chatham House, an international affairs think tank.
(Link: WorldGrain)
