The latest figures about the risk of sea trade southwest of the Arabian Peninsula show that maritime traffic through the Suez Canal has decreased by as much as 50% since Houthi rebels started attacking commercial vessels in the Red Sea and Gulf of Aden.
Spurred on by the Islamist militia movement in Yemen, is the substantial re-activity of violent piracy by seaborne bandits operating off the coast of Somalia, adding to the danger of sailing through the Arabian Sea.
In tandem with risk-avoidance strategies that the liner trade has adopted to circumvent the greater Horn-of-Africa area, vessel traffic around South Africa has increased by 74%.
On the face of it, the route around Africa from Europe to Asia bodes well for the maritime industry south of the Sahara, especially with revenue opportunities from bunkering, ship chandling and travel-related crew changes in mind.
But there’s a flip side to the coin, says Casey Sprake, investment analyst at Anchor Capital.
Considering that the Cape Point detour adds at least 10 days to an average Mediterranean-Arabian passage through the Suez Canal, end consumers can expect to pay more for import goods in the medium to long term.
Sprake says that apart from the opportunities that Suez-avoiding voyages around Africa hold for the sub-Saharan maritime industry, countries like South Africa are net importers of consumer goods.
Keeping in mind that ocean trade through another important ocean short-cut has been adversely affected because of a drought affecting the Panama Canal, where vessel traffic decreased by 30% for the first quarter of 2024, extended shipping costs will ultimately be passed on to consumers.
Sprake says the flow of goods, related delay costs, inflationary pressures, struggling economies, especially emerging markets, as well as supply chain and investor confidence, will all be reflected in the cost of goods the longer trade impasses and impediments continue to weigh on the global economy.
