Friday saw continued attacks on shipping in the Red Sea, leading to an increase in the number of grain-laden ships being diverted from the Suez Canal to routes around the Cape of Good Hope, according to analysts.
Houthi militants, backed by Iran, continued their assault on shipping despite US-led air strikes against their positions in Yemen. Typically, about 7 million metric tons of grain cargoes would pass through the Suez Canal to the Red Sea per month. However, this number has drastically decreased.
“There was a diversion of another 12 ships from the Red Sea this week, carrying a total of about 700,000 metric tons of grain“, revealed Ishan Bhanu, lead agricultural commodities analyst at data provider Kpler.
“A total of around 4.5 to 4.6 million tonnes of grain cargoes have avoided the Red Sea since December,” added Bhanu, also highlighting that there was an increase in the transport of wheat from France and the Black Sea to Asia, bypassing the Red Sea.
Despite this situation, many bulk carriers continue to transport grain through the region. “Many ships originating from the Black Sea are still plying the Red Sea route,” said Bhanu.
Effects on the Global Economy
Tension in the region has made it more complex, but not impossible, for commodity traders to book ships for trips across the Red Sea. This scenario leads to higher costs for these vessels compared to those departing from Europe or the United States.
This deviation is beginning to have an impact on the entire global economy, bringing with it the potential to increase grain prices at global levels, generating a ripple effect on several industries dependent on these inputs.