•This is on the back of the attacks by Iran-backed Houthi rebels in Yemen, who are targeting foreign ships in the Red Sea, forcing shipping lines to re-reroute.
•The Houthis have declared their support for Hamas in the ongoing war where Israel launched a military campaign in Gaza, following the October 7 Hamas attacks.
Importers and exporters in Kenya face an increase in shipping costs as container prices rise by up to 14 per cent at key ports, signalling higher commodity prices.
This is on the back of the attacks by Iran-backed Houthi rebels in Yemen, who are targeting foreign ships in the Red Sea, forcing shipping lines to re-reroute.
The Houthis have declared their support for Hamas in the ongoing war where Israel launched a military campaign in Gaza, following the October 7 Hamas attacks.
Major shipping lines with operations to the Port of Mombasa have re-routed their vessels avoiding the Red Sea and the Suez Canal,
Already, two of the world’s largest containers shipping companies – Mediterranean Shipping Company (MSC) and Maersk have diverted their vessels away from the Red Sea, avoiding the Suez Canal, which is a key route for voyages to Mombasa.
Other firms that have taken similar steps include French company CMA CGM and German transport company Hapag-Lloyd, among others.
Container Price Sentiment Index by Container xChange, a technology firm that offers container trading and leasing platform, indicates the latest developments have led to a rise in charges, ultimately pushing up freight costs.
Ports in China, which is Kenya’s biggest import source, have recorded the highest prices on leasing of containers, which has hit a high of $1,750 (Sh275, 010) while in Europe, the costs are averaging $1340 (Sh207, 030).
This is up from cots of between $1,200 (Sh185, 400) and $1,393 (Sh215, 218) in August this year.
“The unfolding events in vital maritime passages such as the Red Sea, Suez Canal, and Panama Canal have prompted swift responses from major shipping companies, thereby impacting the container shipping sector, “said Christian Roeloffs, co-founder & CEO Container xChange.
Last week, MSC said to the attacks, its ships will not transit the Suez Canal Eastbound and Westbound “until the Red Sea passage is safe.”
Some services have since been rerouted to go via the Cape of Good Hope, meaning vessels have to go through the Atlantic Ocean to South Africa, before coming up to the East Africa region, save for those directly coming from Asia.
In many cases, vessels call at different ports before docking at Mombasa.
This disruption has impacted the sailing schedules by several days of vessels booked for Suez transit, management noted.
Maersk has also paused all voyages through the Red Sea after repeated Houthis attacks and warnings.
Its vessel Maersk Gibraltar was targeted by a missile while travelling from Salalah, Oman to Jeddah, Saudi Arabia.
Salalah is a major transhipment hub serving the Kenyan market.
Tran-shipment is the shipment of goods or containers to an intermediate destination, then to another destination.
According to market data, an additional 40 per cent longer route has caused heavy upward pressure in the operating costs, and is expected to persist as the shipping time extends anywhere between one to four weeks.
The situation in the Red Sea has been escalating quite significantly over the last two weeks, Roeloffs noted.
Container xChange reported about the potential disruptions and implication on the Suez Canal in October this year right after the start of the Israel – Hamas – Palestine conflict.
“Now the shares of shipping lines have jumped in anticipation of a post-Covid disruption revival. It will all depend on how navies take this up,”Roeloffs said.
“If the voyage will now be extended, products with a shelf life of two to three months will not be worthwhile importing from the Far East,” said Yoni Essakov, who sits on the executive committee of the Israeli Chamber of Shipping.
Importers will need to increase stock due to the uncertainty and pay much more and others will lose out on their markets, as time to market is not competitive, Essakov added.
The Shippers Council of Eastern Africa (SCEA) has also warned that the disruption could have a major impact.
“It would pose a major challenge as the vessels will be forced to re-route through West African maritime route while others will call at Djibouti to avoid going through Suez,” SCEA chief executive Gilbert Lang’at told the Star.
According to Lang’at, major impact will be longer vessel times and effect for transhipment ports in Asia and Middle East that service majorly Eastern Africa ports.
“Freight and time increase will occur,” he noted.
War risk premiums (insurance) are also likely to rise, affecting carriers and potentially leading to increased freight costs.
The Red Sea is one the world's most important routes for oil and fuel shipments.
Kenya Ports Authority was expecting at least 26 container vessels, 23 conventional ships and six tankers, between yesterday and December 28, of which eight container vessels belong to MSC.