Renewed slump of ship transits in the Red Sea after slight stabilization

At present, around 40 container ships still sail through the Red Sea every day, compared to an average of well over 100 ships last year. The current number of ships is close to the low point of mid-January, having recovered to around 50 ships in the meantime. This means that the slump in shipping traffic in the Red Sea since the beginning of the attacks by the Houthi rebels has not yet been halted.

However, the consequences for the North Sea ports are easing. Initially, the abrupt interruption of the usual sea route through the Suez Canal led to delays for incoming ships, as they had to take an unplanned detour of around two weeks around the Cape of Good Hope off Africa.

In December and January, around 25 percent fewer ships docked in Hamburg and Bremerhaven, as well as in the ports of Rotterdam and Antwerp, which are important for Germany. In February, the gap closed to around 15 percent, with Bremerhaven even up 2 percent. The reference is the weekly average in 2023.

Freight rates for the transport of a standard container from China to Northern Europe, which previously usually passed through the Suez Canal, are also stabilizing. They have decreased since their peak of just under 6,000 US dollars per standard container in mid-January. Since then, the spot price has been falling continuously and currently stands at around 4,500 US dollars.

The detour around the Cape of Good Hope, which many ships are now taking to avoid the Suez Canal, is apparently also increasing traffic on the world's oceans. Shipping companies now deploy more ships in order to ensure a tight port schedule. The number of container ships at sea each day rose slightly by 0.3 percent from January to February and currently stands at around 5,450 container ships.

"Even if the overall economic consequences are manageable: The renewed interruption of the usual trade routes through the bottleneck of the Red Sea is meeting with a sensitized mood for geo-economic risks and dependencies," says Julian Hinz, Research Director and Head of the Kiel Trade Indicator at the Kiel Institute.

"But we should always bear this in mind: Germany and Europe are economically prosperous because they are open economies that thrive on trade. The learning must therefore be to think about diversification, not isolation. All of this speaks in favor of diversifying supply chains and trading partners in order to reduce dependencies on individual suppliers, countries and trade routes."

We are currently improving the algorithm of the Kiel Trade Indicator. During this time, updates will be done irregularly at the beginning of a month and without numbers for imports and exports. The improved algorithm will be ready by early summer.

Further charts and information on the Kiel Trade Indicator can be found at www.ifw-kiel.de/tradeindicator.