Maritime Disruptions in the Red Sea: Building Sustainability in Times of Crisis

Written on January 22, 2024. Posted in Emissions, Sustainability.

Ocean shippers are searching for new ways to get their goods from Asia to Europe after the Suez Canal has become effectively closed to international trade. In reaction to two attacks on its container vessels transiting through the Bab al-Mandab Strait near the Red Sea and Gulf of Aiden, bound for the Suez Canal, on December 15, Maersk paused movements through the strait. The most direct route between Europe and Asia had become impassable.

Ships transiting through the Red Sea were directed around the Cape of Good Hope, and the flow of cargo continued, albeit more slowly. In the ensuing weeks, the situation has only devolved. Yemen’s Houthi rebels, a group aligned with Iran, have been firing on ships in the area, forcing shipping companies, tankers, and nearly every vessel set to route through the area to change plans.

The U.S. and U.K. have since retaliated against the attacks, targeting the rebels in an effort to end the attacks on vessels and once again open up a key trade route. Stopping the attacks is not only a vital safety concern but closing the trade route has had outsized economic impacts.

The Institute of Export and International Trade estimates that vessels transiting through the Suez Canal fuel about 10 percent of the global economy. If you look at just the container shipping industry, nearly one-third of container ships in the world use that route. A month into the vessel attacks, GDP had fallen by 1.5 percent.

Shippers have been using supply chain technology tools from vendors like Searoutes to optimize new shipping routes and receive real-time analytics regarding those new lanes.

The Unfolding Crisis in Maritime Trade

Maersk acted quickly to the situation even as it was still evolving. On December 14, Maersk’s Gibraltar vessel experienced a “near-miss incident,” and a follow-up attack on another vessel happened a day later. Following the two attacks, Maersk altered shippers to a pause in operations in the area.

“We are monitoring the situation constantly and retrieving all available intelligence on the security situation in the area. We expect to share more information about any next steps for these paused vessels within the next few days,” Maersk said at the time.

Monitoring quickly turned into a decision to send vessels around the Horn of Africa. Maersk directed vessels to the new journey, which can add up to two weeks in transit time compared to the Suez Canal transit. On December 24, the shipping giant received confirmation that a multi-national security initiative dubbed Operation Prosperity Guardian would provide enough security to the area that passage would once again be possible. The decision to transit through the area was short-lived. On the final day of the year, an object hit Maersk Hangzhou.

“After the initial attack, four boats approached Maersk Hangzhou and opened fire in an attempt to board the vessel. Maersk Hangzhou’s security team, along with a helicopter deployed from a nearby navy vessel, successfully thwarted the attempt,” Maersk reported on December 31.

Hapag-Lloyd, COSCO, CMA CGM, and MSC are among the myriad other carriers that have had to pause, resume, and suspend operations through the channel. Rebels attacked an MSC vessel routing from Saudi Arabia to Pakistan on December 26, and on January 8, COSCO suspended trips to Israel amid the geopolitical strife. CNBC reported in early January that carriers had diverted $200 billion in trade from the Suez Canal. The disruption has reverberated throughout the industry, with manufacturers like Tesla pausing production due to the availability of components.

This recent month-long disruption highlights the need for shippers to engage in extensive contingency planning and supply chain resiliency efforts. These attacks are forcing carriers and shippers to reevaluate supply chains the same way they had to scramble to send goods overseas during the pandemic shutdowns or when the Ever Given blocked passage of the Suez Canal for six days in 2021. Then, as now, ships were forced to transit around the Cape of Good Hope.

Supply chain disruptions – in the form of weather events, security issues, or random bad luck – are occurring more and more often. It’s crucial that shippers work with a third-party supply chain technology provider to:

Plan for the unthinkable.
Gather real-time data on potential challenges to supply chain routes.
Enact resilient supply chain and shipping processes.

Companies like Searoutes can help shippers swiftly adapt to supply chain disruptions, find efficient alternate routes, and minimize delays and costs.

Rerouting shipments can lead to new issues

When the standard Suez Canal route became an impractical way to get goods to market, Maersk, Hapag-Lloyd, and MSC made the decision to reroute their vessels. While this move added days to the transit time, the decision at least made it possible for goods to keep flowing around the world during a trying time.

Along with the extended voyage time, these carriers are also facing increased costs (for both transit and operational insurance) and the potential clogging of ports not accustomed to such increased shipping activity. Shippers are seeing rising freight rates and new surcharges passed on from the carriers. At a time when shippers and carriers are focused on reducing carbon emissions from ocean freight transportation, these new routes are adding much more GHG emissions into the atmosphere. Adding between six days and two weeks of additional ocean transit could increase vessel emissions by up to 35 percent. That means that many Searoutes customers are seeing an uptick in their CO2 freight transportation emissions tracking.

Searoutes helps shippers navigate supply chain complexity

Searoutes is a crucial partner for both shippers and carriers navigating complex supply chain disruptions and shipping congestion. The wide-ranging platform is perfect for a variety of uses, but the core features include advanced route optimization algorithms and real-time data analytics.

In the face of Red Sea disruptions, Searoutes empowers shippers with advanced route optimization algorithms and real-time data analytics. By swiftly adapting to rerouted maritime journeys, Searoutes helps companies find the most efficient alternate routes, minimizing delays and cost increases. The platform’s comprehensive suite of tools facilitates informed decision-making, balancing operational efficiency and environmental sustainability. In a rapidly evolving global trade landscape, Searoutes stands as a pivotal solution, enabling shippers to navigate complexities with resilience and agility.

Swift Adaptation through Route Optimization

With the right technology platform and accurate data, shippers can adapt to supply chain adversity by optimizing the route their cargo takes around the world. Commonly, route optimization is based on cost and transit time (considering both distance traveled and speed of travel) or greenhouse gas emissions, but users can also optimize routes that avoid certain areas of the world. Quickly adapting a shipping strategy is only possible with readily accessible, clean data that can be used to create robust new shipping plans while mitigating cost increases.

Environmental Impact: Tracking CO2 Emissions

While rerouting ocean vessels from the dangerous area near the Suez Canal keeps goods moving to their final destination, adding days and days onto a ship’s transit time balloons the carbon emissions impact of each shipment. GHG emissions from supply chain operations already make up around 90 percent of a company’s total emissions, so adding days and weeks to each voyage can have a disastrous effect on the environment. In such cases, Searoutes has a CO2 emissions tracking tool that can help customers minimize the emissions impact of reroutes. The company also provides support to shippers developing strategies around minimizing their supply chain emissions.

Comprehensive Decision-Making

Searoutes enables shippers with a comprehensive technology platform where customers can quickly react to supply chain disruptions, developing new routing plans while prioritizing the reduction of supply chain emissions. Providing customers with a data-driven, holistic view of their supply chain activities leads to informed decisions in evolving trade scenarios, not gut reactions that seem like the right move in the moment. Seroutes shows shippers how to balance operational efficiency and environmental sustainability, even amid the most challenging supply chain disruptions.

In a Volatile Supply Chain, Searoutes Ensures Sustainable Operations

Supply chain technology has played a transformative role in shaping global trade. While ocean cargo emissions may not be top of mind during a quickly evolving supply chain crisis, it’s crucial that shippers weigh every aspect of their supply chain strategy when developing new routes and logistics decisions. Companies leveraging Searoutes stay resilient in the face of increasingly frequent supply chain disruptions arising from extreme weather patterns, geopolitical events, port and canal congestion, or any other logistics issues. These customers maintain resilient operations while also keeping their supply chain emissions in check, ensuring cargo gets to its final destination as fast as possible while prioritizing environmentally friendly shipment methods.

Schedule a demo of the Searoutes platform and see how the company’s technology can eliminate supply chain pain points while helping reduce emissions. Gain control of your supply chain emissions today.